Bernanke Boosts Markets

As he has done so often since the onset of the financial crisis, Federal Reserve Chairman Ben Bernanke confirmed continued easy monetary policy and hinted at additional measures due to weakness and uncertainty in the employment market.

And as has happened so often before, markets rallied on the hopes for more easy money from the Fed’s “punchbowl.”

Some analysts have likened the equities markets as an addict in need of another fix of easy money and yesterday Dr. Bernanke was eager to comply after last week’s decline in stock prices and the sharp sell off in the bond market.

It’s quite obvious that markets are being held afloat, still, on the promise of easy central bank money while economic reports continue to weaken and miss expectations.

Yesterday’s rally recouped last week’s losses:

SPDR S&P 500: (NYSEARCA:SPY) +1.40%, up sharply on Bernanke’s speech in spite of slowing earnings and overbought conditions.  RSI is now back at 70% with Stochastic in overbought territory.

SPDR Dow Jones Industrial Average: (NYSEARCA:DIA) +1.2% to approach last week’s near term highs.

Russell 2000 Index: (NYSEARCA:IWM) +1.9% to surpass last week levels and set new interim highs.

Nasdaq 100 (NYSEARCA:QQQ) +1.8% with RSI now at 80, extreme overbought conditions.

West Texas Intermediate Crude Oil (NYSEARCA:USO) +0.30% on renewed hopes for economic growth and declining dollar.

Markets are now at levels last seen in 2008 as bullishness persists based on Federal Reserve support and hopes for improving growth ahead.  Markets continue to ignore missed economic projections in United States economic data points and reports indicating slowdowns in China and Europe. 

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