The market got a huge pop to start the week despite a looming Fed meeting that would take center stage midweek. We aren’t sure what the Vegas odds of a taper cut were but Wall Street had the Fed as 10-to-1 favorites to cut back on its monthly quantitative easing program. Nearly 90% of the suit-and-ties had penciled-in a cut in September and we were in the 10% camp that figured the Fed would wait.
We did a tap dance of our own on Wednesday when they Fed stayed pat. Many believed Fed head Ben Bernanke chickened out by not doing at least a small cut but he is well aware of the upcoming debates in D.C. and decided he couldn’t trust the zombies (or the economy) enough to slow down the printing presses. As a result, the market soared to new highs as the shorts ran for cover.
There was a little consolidation on Thursday and into Friday’s session before the bears made a late week ambush. There were a lot of factors in play that contributed to the pullback but we doubt the bulls are through running as the look to end September on a strong note. However, a continued selloff to start the week and a break below support could give the bears optimism heading into October. (read more…)
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