The pros will tell you one of the first rules of trading is “don’t fight the Fed”. In other words, when the Fed is pumping money into the “system”, the market usually goes up. Ben Bernanke’s is making sure of that.
Wall Street rallied on Monday after comments made by the Fed Chairman saying supportive monetary policies would remain in place and that another round of quantitative easing could be a possible. Bernanke said the U.S. economy would need to grow more rapidly to produce enough jobs to further bring down the unemployment rate.
This spurred a huge relief rally following last week’s slight pullback as the bulls reclaimed resistance.
The Dow jumped 161 points, or 1.2%, to finish at 13,241. The blue-chips went out near their high and easily cleared the 13,200 level.
The S&P 500 soared 19 points, or 1.4%, to settle at 1,416. The index reclaimed the 1,400 level and closed above last week’s 52-week high of 1,414 which gets 1,425-1,450 back into the mix.
The Nasdaq surged double-nickels (55 points), or 1.8%, to end at 3,122. Tech also closed at its peak and is less than 1% away from our near-term target of 3,250.
The Russell 2000 zoomed 16 points, or nearly 2%, to close at 846. The S&P Volatility Index ($VIX, 14.26, down 0.56) fell 4% while gold and silver rebounded. Gold closed at $1,688 an ounce, up $25, while silver added 60 cents to end $32.76 an ounce.
Futures are showing a slow start as we head to press and look like this: Dow (-9), S&P 500 (-2), Nasdaq (-1). We have a NEW TRADE we are releasing this morning and we are going to try to get into the options at the open using limit orders. Subscribers, pay close attention to the trade instructions and be sure to check the Hard Stops for some of our current trades which moved up as we lock in further gains.