Take a look at the charts below:
You can see what I mean by that.. So what do you do in that type of situation? Go dig in your heels and short weak stocks to make you feel like you were right? Obviously not, there are tons of stocks out there saying that the market wanted to head higher and today's candle confirmed it. In fact, when I saw that reversal off the lows I knew that was exactly the confirmation I was looking for. I obviously wan't the only one due to the follow through. People that acted quickly were able to get very defined risk trades on the the indices. As far as individual stocks go, you had time to think and make decisions into the close. The only risk that I considered was that fed days tend to reverse, but at the same time this market is unstoppable and with today's candle the market structure actually looks pretty good, so I'm long until I'm wrong.
Names like AMZN, CLF, FSLR, GMCR, KORS, TIF, XOM, TWTR, VMW, & WFM are a few that I'm taking entries on and keeping on watch. I was reluctant to take the entries before the announcement because I didn't know how they would react to the fed news, whatever it was. But the take-away here is to be prepared, if there is a huge news event like this that was causing uncertainty then wait it out with a game plan for the possible scenarios. If the market started selling off I wasn't going to trade much because of the uptrend we are in, but if we got the day we did get then I had a list of names waiting for long entries.
Obviously today was Bernanke's last FOMC meeting as fed chairman. No matter how much I disagree with his policies and how he potentially destroyed America's future due to politics/lack of economic knowledge, and created unprecedented debt for both the federal reserve and the U.S. government, and did his best to destroy the value of our currency, I will wish him good luck on his next endeavor. I am sure any one in his position would have done just as horrible of a job as he did and I'm sure Yellen will make him look like a Saint, so I won't take it out on him personally.
I wanted to have a small part of this directed towards the taper. The main point I want to stress is two part; first off, the taper was really not large. $75B is still unprecedented. Secondly, the announcement of the taper is not what is going to cause a decent correction if not more, it is going to be the consequences of a taper (a significant taper) that no body on Wall Street sees coming. People on Wall Street don't understand how addicted we are to cheap money (some do), I know it's just a cliche saying now but it's serious. Our banks can't survive without it and neither can a lot of companies that finance a lot of their daily business activities. The federal government has to pay the rates on $17 trillion in bonds, they can't afford it without going into more debt. Don't forget about the consumer either, the average American is completely broke. There is absolutely no way they can afford higher rates.
So there is two options, keep the QE forever in ever increasing doses or face the music and let the free market work.
I know the argument, the fed can keep rates low by saying that rates are low... I won't dignify that with a response.
Anyway, hope everyone had a good day today and made good decisions.
Take care
