We didn't get much from Bernanke, just a pledge to consider additional measures at the Sept 20 Fed meeting. Maybe that is exactly what this market needs.
Traders reacted skittishly to the lack of details from the speech but what we are seeing now is a significant bounce as Europe rallies into its close (finishing down about 1% across the board but well off the lows). One of my favorite stocks MOS is up 3% and well off lows of 66 as it tests resistance at 69. C rallied back to flat but the financials are relative underperformers this morning (flat while SPX is up 50 bps).
Two bearish indicators post speech:
- Gold is up about 1% to 1785 - usually up on risk aversion but I am not giving it too much weight because it's simply a short term oversold bounce.
- Although off the highs, treasuries are still elevated. I think this has more to do with the GDP miss (1% vs. expectations od 1.1%) than anything Bernanke said.
Why I am still bullish and continue to buy dips:
+ The Euro and USD have been a bit bipolar this morning - above the 1.44 level pre mkt, selling off dramatically as Bernanke spoke, bottoming at 1.4330, and now spiking higher above 1.4450. I have been eying this level for weeks now, and I believe we are seeing the first stages of a Euro breakout from the wedge formation I have posted in the past. I'm expecting DXY to break key support and gap down to the 52 wk lows of 73.
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