Tuesday, March 13, 2012

Federal Reserve and Banks Give the Market a Big Boost; Small Caps lead the way

Market Timing Model switches to Buy Mode

Economic news was thrown aside today as the Federal Reserve and banks spark buyers to come back into the market. Advance retail sales figures came in line with expectations and didn’t provide much of a spark for the market. All eyes were on the FOMC meeting and its subsequent rate decision. It wasn’t until 3pm after the rate announcement did the market find buyers. JPM announced a share buyback program and a boost to its dividend. It was all the market needed for buyers to rush in and buy up stock. Small caps lead the day with more than a two percent gain showing risk on is back. Volume was up across the board showing institutions were back buying shares. We are back in buy mode as today was precisely what we needed to see to keep this uptrend alive.

Last week’s action in the market is a mere blip on the radar screen and is in distant memory. It is quite funny how things can change in one day! Today was a clear signal there was a thirst to buy up shares in a big way. S&P 500 volume was above average thanks to banks like JPM and BAC. JPM got the ball rolling announcing plans to buy back shares and boost its dividend. Subsequent bank stocks announced similar plans, but it was JPM starting it all.

After JPM announced its plans there was a headline the Federal Reserve was going to announced its stress test results after the bell. However, looking at an intraday chart, buyers began their operations just before the 3pm final hour. Did someone leak the positive stress test results? It is quite odd the market took off slightly before the JPM announcement. I am sure the SEC will be investigating.

More importantly we have a slew of new long candidates! It is always a nice confirming signal when the market blasts higher and we have new quality longs. We’ll continue to stick with this uptrend and let others fight the trend.

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