Stock futures are up sharply this morning on news that the US Federal Reserve, the European Central Bank, the Bank of England, and the central banks of Canada, Japan, and Switzerland announced a coordinated plan to increase availability to dollar liquidity for financial institutions. The action takes the immediate pressure off of European banks just as they were showing signs of an increasing liquidity crises. While the short-term impact is certainly positive, the longer term effects are unknown. The current market is dependent upon government intervention for any positive movement. That is not to say that this rally can't last for some time. After the windfall decline over the last few weeks, we will have to wait and see whether or not the US indices can get through the levels of resistance laying before them. The S&P will open above its 50 day moving average and the next level of resistance rests at the 200 day moving average. That level is at 1233 just a few points above where the S&P will open.
The December 9th meeting of European leaders lies on the horizon. That meeting could yield a longer term solution or could bode ill for the markets if it leads to no unified action. The markets continue to be driven by political maneuvering which makes it extremely difficult to trade this market. It becomes a coin flip on whether or not the market is going higher or lower on any given day as technical and fundamental analysis takes a back seat to the whims of politicians. Our portfolios are currently market neutral - waiting on some direction. We are watching closely.
Welcome to the extended version of the BAM Market Note. We are not bloggers by nature but have had clients and friends inquire about our thoughts on the market in between our newsletters. The number and content of posts will likely be determined by the conditions of the markets and the interests of our readers. We would greatly appreciate your feedback and comments.
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