Wednesday, July 13, 2011

Bernanke Hints At QE3

The markets are getting a nice bounce in early trading on the heels of positive data out of China, remarks from Fed Chairman Bernanke, and rumors that Congress has a backdrop in place to avoid defaulting on the debt ceiling.

Bernanke is testifying before Congress in his semi-annual monetary policy hearing, and in his remarks he said that the Fed stands by to provide additional monetary stimulus (i.e- QE3) if economic conditions warrant it. This boosted sentiment in stocks, but also led to a rally in commodities.

Commodities are higher across the board. Gold prices have hit new highs above $1585. Oil prices, which started yesterday below $95 have rallied back above $98. Ag commodities are higher today as well.

China released its Q2 GDP figures last night, which showed its economy grew 9.5%, above expectations. The data helped Asian markets rally overnight, and also boosted European markets this morning, briefly diverting attention from the debt issues.

The 10-year yield is higher today at 2.94%; and the VIX is falling -8% back to 18.22.

Trading comment: The SPX hit its 50-day average yesterday and has since bounced higher off of it. I continue to look for stocks that are breaking out to new highs and leading the market. Here is a short list of some of them: ALXN, LULU, PNRA, GSM, PTEN, and there are a host of others that are close to breaking out. Keep an eye on them, as they could be part of the new leadership among stocks if the market stays firm.



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