9:00am (EST)
It’s St. Patty’s Day but the bulls have been wearing green for a few weeks as the market continues higher.
After a slow start, the market traded higher for much of the Tuesday before slipping near even ahead of the Federal Open Market Committee’s rate decision. No drum roll needed as there was no surprise when the central bankers kept interest rates at current levels.
The FOMC also reiterated its stance that economic conditions are still shady but that didn’t matter to the bulls who took the market to fresh highs immediately after the announcement was made. The bears fought back a little but in the end the bulls took the market to 52-week peaks.
The Dow added 43 points, or 0.4%, for the day and closed at 10,685. We have been on record for months reiterating our target of 10,800 for the Dow and possibly 11,000 over the near-term but short-term resistance could come into play at these levels. However, given how the other indexes are acting it looks like the Dow will follow suit.
The S&P 500 settled at 1,159, up 9 points, or 0.8%, and set a fresh 1-year high in the process. The talking heads have been targeting 1,150 as a key level for the index but we said back in August and in January that a run to 1,175 was in the cards. This level failed in January but we said we the index would be back. If we get through this level you can bet the bulls will target 1,200.
The Nasdaq has been the pillar of strength for the bulls and the index added another 16 points, or 0.7%, to close at 2,378. The index is not only at 52-week high but also an 18-month high. Pencil in 2,400…
[caption id="attachment_4693" align="aligncenter" width="448" caption="NASDAQ Weekly Chart"]
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We have been pretty good at nailing the market’s direction but the one thing that has us worried is the healthcare reform bill. And we didn’t think something would get passed possibly this week. We have talked about the political rhetoric and musings that continue to hang over Wall Street’ s head but this bill has us nervous and could ruin the momentum the bulls have been building up for over a year.
The other thing that worries us is how the U.S. continues to throw darts at China on numerous fronts. There is news out now that we are now pressuring China to let its currency rise in value against the dollar as some on “The Hill” think Chinese “currency manipulation” is hurting the U.S. economy. Those are two big words from us to the largest foreign holder of U.S. Treasury bonds.
This doesn’t mean the market can’t go higher but with our short-term targets coming into play we need to look 3-6 months ahead and factor in what this could mean for the market.
There are still a number of positive catalysts that can carry the market higher and even through resistance. However, once we get there the volatility could return to heights we haven’t seen in awhile.
Other than that, the trend is still our friend.
As we head to press, the Dow futures are up 22 points to 10,646 while the S&P 500 futures are higher by 3 to 1,158. The Nasdaq 100 futures are showing a 2 point pop and are at 1,930.
We have a NEW trade this morning we are profiling and we are hoping to get filled at the open. Current subscribers, check the Members Area for the updates.
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