BIG MONDAY RALLY

We never know the stocks rose by good economic data or it was driven only by the low pre-Xmas volume. The fundamental news was yesterday that the industrial production jumped 1.1% in November, far more than the 0.6% expected by economists. It seems to me by now the market interpret the good news as good news. Previously the news meant bad news for the investors. If they did hear any good news they got started to scare about the tapering.

It was the biggest rally in the US markets since end of September. It is surprising before the Wendesday FED meeting. Frankly I expected a quiet Monday and Tuesday. Last week was generally a losing week so this Monday rally was a good start. The SP500’s gain was led by technology and energy sector, which is a good signal.

SP500 +0,63% to 1,786
DJIA +0,82% to 15,884
Nasdaq +0,71% to 4,029

The question is the same on Wendesday which ruled the whole 2013 year. Tapering or not. $85 billion bond-buying stimulus program is under consideration on FED meeting.

Technically the SP500 from the bottom level (1,760) made a break out on Monday at 1,776. The real confirmation will come for the bullish trend if the 1,786 key level will be taken. If it breaks we can wait for back testing the pervious top at 1,810. Today could come a correction and quite trading day but tomorrow we have to fasten our seatbelts.

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The BFM Assets Team.