IT IS NOT A TAPERING, JUST A "T"

Yesterday announced the FED the tapering, I would say it is not a tapering it is just a "T." This is what about the market and investors scared about in the whole year. And, what happened? NOTHING. The Fed directors voted to reduce monthly asset purchases to $75 billion from $85 billion due to the improvement in the outlook for the US economy.

The market’s reaction was absolutely and really positive. US indexes are at new highs again at record levels. This investors don’t have any concerns about that 10 billion cut. As I expected few months earlier any kind of tapering was priced in already. Never forget the market always do what is the most unexpected. Now the FED did the same. This decision was against the biggest consensus of not tapering. The FED and Bernanke showed to the audience at his last yesterday meeting that there is middle way solution. Very slight tapering, but tapering – I would say a bit tightening.

Last night the US markets showed that doesn’t care about anymore about tapering. The market is hungry and focusing only for good news. The time has come where the good news are the good news. Remember, in this whole year the good macro news meant bad news for investors, because there was a fear about the tapering.

The short conclusion is that nothing to do anymore with the yesterday tapering. The other fact is that we are fully heading to the end of the year. So this combination with the pretty bullish trend is which was not violated means the markets will keep going up in December with a lower volume.

Technically the market right after the news jumped up and then dived for few minutes and headed north again and reached new record levels.

On SP500 chart as we forecasted on Monday the market made a clear break out up to the 1,810 key level. Shortly I am sure is gonna take out that key resistance level at 1,810 and going up further. Don’t forget this yesterday reaction proved again how bullish the market sentiment now.

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The BFM Assets Team.