By Lawrence G. McMillan
What happened yesterday is relatively unimportant. It’s what’s happening tonight that is the big story. Yesterday, the market temporized while waiting for the FOMC minutes, and then it didn’t do much after the minutes were released, either. However, Bernanke spoke after the close, and the market is interpreting his comments as indicative of the fact that QE is just fine, and tapering won’t occur anytime soon. Actually, this is really what he was saying last month as well, except that he stated it slightly differently. S&P futures are up 17 points right now, near the overnight highs. If these gains hold into the NYSE opening, this will allow $SPX to break out over the 1655 resistance and it will put it very near the all-time closing high.
Personally, I find it ridiculous that the market reacts so strongly to Bernanke’s intentionally benign statements, but the “interpreters” are in charge of the stock market right now. And last month they interpreted what he said as negative, but today they are interpreting it as positive. No matter that his message has been steady all along: no easing in the QE until the economy improves, and so far they don’t have evidence that it is improving. Of course, we’re not supposed to think about what it means in the bigger picture that the economy isn’t improving, even though stocks are racing to all-time highs. You could easily get a headache trying to wrap your head around that piece of circular logic...
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