Where is the stock market headed after Feds meeting?
Feds didn’t provide what the market needed after yesterdays FOMC meeting. The market was looking for some gift, some drug as it is dependent on it for continued uplift and its mood, instead it got a muted response from the Feds. They did however say they will provide assistant if needed, and closely monitoring the economic data, and if there is enough weakness in the economy they will not hesitate to jump in.
As a result SPX is trending down in this channel towards the bottom trend line. Even though the direction is up, the market is moving down on a pull back to the 1346-1347 area. If it bounces there it will come right back up. If it penetrates it on heavy volumes it is going down much further. Click on the chart to enlarge.
The problem is economic recovery never got to a fitful start. It never had a chance to begin with. The foundation wasn’t laid out soundly, and all the cards were not on the table. It always starts and fails, sputters, and goes down. The Feds have gone in and cleaned up the mess via long term buying of securities and QE3 and so on, time and again. It gives a temporary boost to the economy, and than again something happens, and the liquidity fails to ignite the spark. This has been the hallmark for this economic recovery for the last three to four years.
This week the GDP also grew at an anemic rate of 1.5 percent which is hardly enough to cut down high unemployment rate of 8.2 percent. According to economists a GDP growth of 3 percent is needed to shred some unemployment numbers. The last three jobs reports were also anemic at best averaging 80,000 jobs added per month. That is barley enough to keep up the growing work force which needs at least 125,000 new jobs every month added to keep up with the unemployment rate.
Its just a tangle of bad numbers and poor recovery that has marred any strong performance from this stock market.
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