A Change in Tone

traderchild

Junior member
15 1
I’m so proud of our Fed chairman. I didn’t give him enough credit, but it looks like he might’ve learned from the past couple months of missteps. Finally, he’s starting to tell people what they want to hear. Nobody wants honest talk of nearing policy changes based on positive streaming data.

The markets don’t want to know change is ahead. Ben finally gets that.

Let’s be truly honest. At the moment, I’m still only peaking halfway out of my foxhole…just waiting for the coast to be completely clear. If the technical picture continues to dictate, I’ll resume long orders on a number of positions.

Volume and momentum are fantastic right now. The S&P completely shattered its previous resistance and has left its 50-day MA in the dust.

And all of this because of the choice words of one man…

Admittedly, I do find the premise of much of what Bernanke said to be a little perverse. The concept of “accommodation” in the face of perceived slow growth, coupled with an active “push” against rising rates raises questions of just how long this era of credit manipulation will truly last.

Putting aside what the market wanted, Bernanke’s words carried with them a perceptible air of extended longevity. That is a disturbing thought – especially considering that there’s a more finite amount of assets available for purchase than many care to realize.

Consider just how difficult it has been to push unemployment down to where it currently resides, and that Fed still wants to attain another percentage. Also consider that the Fed is still fighting deflationary pressures, despite the massive amounts of credit they’ve been pumping into the system since 2008.

Even worse, should the Fed’s current forecast be taken at face value, it means that the overall economy is actually far worse than previously projected. That’s what’s so maddening about the current trading environment. The very foundation for today’s short-term rally is contrary to what is healthy for stocks in the long-term.

We must realize that in history’s context, QE is still in its infancy. Easing has thus far made for a frothy equities market, but its effectiveness won’t last forever. I can’t help but wonder…how deep does the rabbit hole go?

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Traderchild | Market Commentary and Actionable Analysis
 
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