Bernanke sparks major rally, changing the context altogether. Investors and traders have been in a state of high anxiety for months about (ta-dum) the dreaded taper, or as it is sometimes known the removal of the punch bowl. When Bernanke said that he was just going to pour in a little less gin the market got all giddy and blew out the shorts. Shorts and contrarians have controlled the market the last (m/l) 14 days. This will shake their confidence — a new high close. But not a new high. Nevertheless the pattern is broken. Now we must see follow up and confirmation.
A closer look:
Here we can see both the Basing Point stop (1547.68) and the New High stop (1695.74). We can also see the virtue of long term patience on a day with a bonus of 30 S&P points. Now we wait to see if this has broken the morale of the contrarians — for the nonce at least. Contrarians are like rust. They never sleep. But they’ll have nightmares tonight.