I am just alerting you that markets are now rallying up into logical resistance areas. In my last couple of missives, I told you I thought we would see short term good news in the market as we had a follow through day and a good reaction to whatever Bernanke said. To my amazement, and maybe not, the move has covered lots of territory in a short period of time. But…please recall that I told you on two separate occasions that it would be normal to rally up into resistance as the markets were stretched away from their norm. Markets are now getting closer to their norm.
I am open for anything. As I have told you, with a Fed that is going to drop another trillion or two real soon…with a President who is going to propose another trillion or two of deficit spending, nothing is off the table. These unprecedented moves have a huge influence on markets. Of course, the ultimate outcome of massive debt will eventually be a huge negative, but in the near-term, anything can happen. Remember, the Fed knows they cannot influence the economy…but they have been able to influence markets…and will continue to try.
Again, this move up is normal. It is what happens into resistance that is going to matter most.