Although we had two major news events today, the indices ended the day with modest gains. The SPY ended at the day high and is pushing above the psychologically important $120 level after hour. Will that trigger some buy stop tomorrow? We seem to lack the euphoric actions that mark a short term top. The trading had being centering around a push above a whole number on the S&P500 and after that it would back and fill in a 10pt range for a couple of days before stair stepping higher.
The election gridlock news and the speech by President Obama were as expected. The Fed announcement was also pretty much as expected with the size of quantitative easing. The Fed did manage to surprise by shifting its buying from longer-term bonds to shorter maturities. Will that impact the normal correlation of dollar, gold and bonds? In addition the bulls received another get out of jail free card with QE II lasting until 2nd quarter of 2011. We will have POMO again tomorrow, and could be another early rally-drop-flat line-rally day. All eyes will be on the monthly jobs number on Friday morning, which is going to be very important. Perhaps a gap up above the April SPY highs on a good number will offer a quick fade trade. But we have mutual fund/POMO Monday and the Turkey God to prevent us from falling too far.