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. March 16, 2010 FED KEEPS RATES RIGHT! "C'mon Down, Ben!" That was the holler heard up and down Wall Street Tuesday as the Fed's unsurprising interest rate decision was announced. They used to say after a Fed announcement "the first move's the wrong move". Well, they used to say a lot of things but no one can fade "the beard" or not partake of the punchbowl. The latter remains fully spiked and available to the Fed's Primary Dealer network to trade. Since we're basically long now, we should cheer; but, I feel really uncomfortable with a "managed market" where trading desks and hedge funds dominate. Who said you have to be comfortable anyway? The dollar fell and commodity (gold and oil for example) rallied as the credibility challenged S&P maintained an investment grade rating for Greece. They know how to play ball. Stock markets rallied on somewhat heavier volume while breadth was positive per WSJ: Continue to Major U.S. Markets
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So Bernanke gives the markets what they wanted -- more juice for the punchbowl. Markets are overbought basically from many different perspectives, but that can continue longer than most imagine. Energy prices probably got a boost today as options expiration in energy pits always creates unusual trading. We'll see if there's some follow through with inventory data tomorrow and expiration ends.
Wednesday will feature PPI data which should be uneventful and crude inventories which might be of greater interest. Post Fed days can always feature a turnaround from days like today. Look for it. Let's see what happens. You can follow our pithy comments on twitter and become a fan of ETF Digest on facebook. Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, VTI, RSP, IWM, QQQQ, IYR, XLF, XLI, UUP, EWC and EPI. 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 .