NEW YORK (TheStreet) -- The stock resumed its winning ways on Wednesday. After two days of profit taking, all four indexes returned to the upside.
The DJIA was up 78.99 points at 16985.61 while the S&P 500 was up 9.12 at 1972.83. The Nasdaq closed higher by 27.57 points at 4419.03 and the Russell 2000 was higher by 1.66 at 1173.81.
It should be noted that all the averages were higher on air. The volume was once again on the low side, as it has been for quite some time on up days. Even the FOMC minutes could not spark much buying conviction.
So I will not get very excited about this up day. These types of days are known as "dead cat bounce" days. The same old technology momentum led the Nasdaq higher. These are the stocks the hedge funds run to for performance. I am speaking of stocks such as Facebook (FB), Twitter (TWTR), Yandex (YNDX) and Apple (AAPL).
Speaking of the Fed minutes, the central bank is between a rock and a hard place. It has said that it will end the bond purchasing by October. If it withdraws the easing by stopping the money printing, the Fed will puncture the asset bubbles. If it keeps printing, inflation will gather strength. As weak data over the rest of the year come in, the Fed will realize it has tapered into weakness. This will cause it to launch new money printing, or QE4, in 2015.
The big winner in terms of asset class will be the precious metals, energy and gold.
Thus, we will continue to be opportunistic in our trading and allow the algorithm numbers to determine our buying and shorting. What I am currently seeing is a stock market that has very few large-cap stocks that are extremely oversold. This tells me the stock market needs to go lower to have more oversold setups.
This hedge fund buying is not creating many opportunities on the long side. This is exactly what happens when the Fed backstops or puts in a downside floor in the stock market. This Fed-induced bubble will end at some point and the avalanche will start. The Fed will not be able to stop it because of the flawed policies it instituted.
At the time of publication the author was long OIL.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.