The market was waiting on Mr. Bernanke today to make sure that the status quo was with us for a long time to come. The market was not in the mood to hear anything related to van imminent rate-hike cycle or the removal of the liquidity machine he has had on for what seems like forever. He did not disappoint as he kept things the same and said he would be holding things as they are for a very long time to come as the unemployment rate is still far too high at 7.7%. The real rate as we know is far higher than that as those who can no longer apply for weekly aid are not counted. The estimated number is well up in the teens.

The Fed knows this and by no means is he about to allow the stock market to fall very much. He will keep the economy going by keeping the stock market rocking along. That's been the plan and the plan has worked. He has convinced himself that 100% increased costs in health care, food, and energy have not been inflationary. Well, he knows better, but that's the speech he gives the American public. The public buys it because they would rather have inflation and a good stock market versus the alternative of deflation but a terrible stock market. Since folks plan for the future, they'd rather see their portfolios rise through the years in an ongoing bull market.

The market started out with upside action this morning as it anticipated good news from the Fed. Buyers coming in on any excuse to buy. Retail buyers doing some of the heavy lifting these days as it's really not the big money doing much. It's more that the bears have left the building as the expression goes. Down to 18.6% on the bull-bear spread. Bulls are down heavily as well to only 47%, the lowest reading of bulls in quite some time. The market is seeing many participants turning agnostic. Nothing wrong with that if you're a bull.

Sure, you'd love to see more bears that 18%, but the low number of bulls isn't a bad thing either. The market closed off the highs but still was strong. A strong pullback can occur at any time since we're dealing with some additional overbought conditions once again, but it's not across the board yet on the daily charts. Another decent day for the bulls but don't be shocked if you get a sudden burst of selling at any moment from a technical perspective of overbought on many time frames on the key index charts. Nothing bearish around but now we can sell to unwind.

One really good thing I've watched happen in this market is how it's rotating around and doing well even when the leaders aren't participating very much. Some strong leaders with international exposure are doing poorly. The new thing is how companies with lots of exposure in Asia and Europe are seeing business go down quite a bit. We heard it from Caterpillar Inc. (CAT) and FedEx Corporation (FDX) today. Two huge leaders that saw strong down side action yet the market rocked along. Many are struggling, yet the second-tier stocks are taking over, again, especially those with business done mostly here at home.

When doing your stock work, you should focus your energies on stocks doing their business mostly here at home and avoid the internationally exposed companies. When you can have strong leaders no longer performing and actually breaking down, yet the market plows ahead, that's nothing but bullish for the bigger picture. The Nasdaq broke through some and close above 3249 or gap resistance. If it can clear trend-line resistance at 3260 it is on its way higher, overbought or not. It would be best to sell some but the market is performing well enough here to keep the bulls happy. We can stay overbought for a long time, although it would be best not to. Stay on the long side of the ledger is how I think it's best played for now.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.