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Stockhaven @ the close 8/23/2011: Bad news? Who cares? Bernanke's coming! | Stock Haven | Stock Chat Room | Penny Stocks | Options |Stock Haven | Stock Chat Room | Penny Stocks | Options |

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Stockhaven @ the close 8/23/2011: Bad news? Who cares? Bernanke’s coming!

The market did its best Paul Revere impersonation today, except instead of proclaiming the British are coming, it is Bernanke who is on the way. And unlike the fear that came with the arrival of the British, the market was elated to know Bernanke’s high profile speech at Jackson Hole is only a few days away. While we’re not sure how the market will react to the actual developments from his speech, today’s action is a clear indication to us that the market is getting its hopes up for more stimulus, or something of the sort.

The domestic data we received today was “recession” scary, with the Richmond Manufacturing index showing manufacturing activity in the central Atlantic region declined to its lowest levels since summer of 2009. Furthermore, a separate report on housing showed sales of new homes fell for a third straight month in July. But instead of focusing on weak domestic data, the market chose to pay more attention to better than expected PMI data our of China and Europe. With the overseas markets positive, and Bernanke on the way, the markets took the glass half full approach and sent the markets back above some near term resistance levels.

Furthermore, we’d like to point out the role technicals played in the market today. We’ve been harping on the importance of the 1,120 level on SPX for the last two weeks and the last few trading days were a great example of why. For four days in a row SPX has flirted with 1,120 but has managed to remain above it. Today once SPX started to move away from 1,120 it seemed to act as a trampoline of sorts, propelling the markets higher as many traders shifted their approach realizing that 1,120 was likely to hold for at least another day. This change in sentiment added excess demand to the market. Remember, there are many market players who do this for a living, making money going both up and down. So as it became apparent that today it was going to be easier to make money going up, as opposed to down, the markets bounced hard.

We urge everyone to remain open minded to the markets daily fluctuations. Just because we went up 3% today doesn’t mean we’ve bottomed, and if we go down 2% tomorrow it won’t mean we’re definitely going lower. Respect the key levels that keep holding as support and resistance. Right now, that support level is 1,120. As for resistance, SPX broke out above 1,150 today so the next range to watch will be the 1,175 – 1,200 region. Monitor gold as well for a market tell of sorts. It declined today but when it appears to have bottomed, it could be a sign the market is nearing a short term top.

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  • Morris K.

    hey, that’s a good Paul Revere reference/analogy!

    • http://www.stockhaven.com StockHaven

      Thank you, we try to keep the content unique. Glad you noticed :)

  • ???????????

    Very nice post!

    • http://www.stockhaven.com StockHaven

      Thank you, glad you enjoyed it :)

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