Santa Claus Rally ? Feds take the market higher
Feds will taper the QE3 and the market jumps on the growing expectations of a solid economy. The conditions have been improving already as evidenced by a very strong earnings season. The growth in GDP to 4% also made a strong case to buy more stocks and sell nothing. SPX has hit a new high and mostly likely will travel to the upper channel at 1840. So far the bulls are enjoying the ride.
The pullback in the market last week was limited by the Fed’s announcement on Wednesday. The shallow pullback in SPX barely touched its 50 day MA and it rebound with great intensity. RUT however did bounce technically from the 50 day line and has since moved higher along with the market. The most stretched index is now NDX which has GOOG and AAPL and other notable names.
GOOG has touched 1100 mark and possibly extend a little bit more next week. PCLN which is another 1100 dollar stock, is now basing at a higher level and for a possible launch to the upside. CMG did a nice turnaround on its 50 day line and rebounded 18 points on Friday. The action overall last week was extremely bullish.
Expect same bullish trading into next week, as these indexes may get top heavy, and may rest or slide back. The Santa Claus rally has not stopped yet.