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Dave's Daily: Bulls Charge Past Bernanke

The discount rate hike by Bernanke's Fed caused some knee-jerk selling but ultimately this was spun as good news since it demonstrated strength in the economy. There was significant action away from stocks in dollar and commodity market reversals. And, those caught my eye especially.
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Dave's Daily

By Dave Fry, founder and publisher of

ETF Digest

and author of the best-selling book

Create Your Own ETF Hedge Fund.

February 19, 2010

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BULLS CHARGE PAST BERNANKE

The discount rate hike caused some knee-jerk selling in stocks, commodities and currencies.  But, the Fed's actions were spun as good news since it demonstrated strength in the economy.  Or, when you're in charge--charge. 

There was significant action away from stocks in dollar and commodity market reversals.  And, those caught my eye especially.  The euro fell below 135 briefly but then rallied up above 136 by the close.  Oil and gold were lower earlier but they also rallied. 

The bottom line is short sellers were run over.

Volume again was on the light side especially for an options expiration day while breadth was modestly positive.

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Continue to Major U.S. Markets

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Continue to U.S. Market Sectors, Bonds & Beyond

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Continue to Currency & Commodity Markets

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Continue to Overseas & Emerging Markets

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Continue to Concluding Remarks

Options expiration passed with few shenanigans while volume rose somewhat which is expected on expiration days.  The Fed's increase in the discount rate was quickly brushed-off by bulls who literally ran over any would be sellers whether in stocks, commodities, currencies and even bonds. 

An investor is always advised to diversify and that's always good advice.  Some say you should be in the "right sector" always.  But, in this easy money environment, there isn't much to distinguish one sector from another besides volatility.  This is the market we have today.  When the ubiquitous punchbowl is removed (Fed Funds increase) more diversified opportunities for those who made it out the exits in one piece will exist.  For now, it's just program trading as trading desks and hedge funds pick each other's pockets.

Next week we'll get a good dose of economic data as the month of February ends.

Let's see what happens and you can follow our pithy comments on

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Disclaimer:  Among other issues the ETF Digest maintains positions in: UUP & TBT

The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell any security.  Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period.  Chart annotations aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at

www.etfdigest.com

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Dave Fry is founder and publisher of

ETF Digest

, Dave's Daily blog and the best-selling book author of

Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management

, published by Wiley Finance in 2008. A detailed bio is here:

Dave Fry.