Fed's hidden agenda.

In the mid-2000s, Alan Greenspan was the hero of the financial world. With his blunt philosophy of inflation, Greenspan was credited for turning the tech-bust into a real estate and financial boom.
Following the 2008/2009 meltdown, Greenspan morphed from hero to scapegoat similar to some of the traders at some of the reputable financial instituitions and hedgefunds that blame their fund managers for making huge losses.
Bernanke carried on the torch of fearless Keynesian Fed Presidents and made it on the cover of Time magazine within his first term.
According to Bernanke (quoted in the Washington Post), inflating stock prices is the golden grail of today's monetary policy: 'Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.'
So by inflating asset prices,the main benefacto will be the Wall Street bankers.Hence,retail investors have to bail out from mutual funds and start chasing after stocks.He has been artificially depressing interest rates takes away wealth from savers and distributes it to borrowers.
The effects:-
August 2007: Fed lowered discount rate, unemployment rate at 4.7%
December 2008: Fed reduced rates to just north of zero, unemployment rate at 7.4%.
March 2009: Fed launches QE1, unemployment rate at 8.6%.
November 2010: Fed launches QE2, unemployment rate at 9.6%.
Tracking the Dow,Friday 10/12/10.(5 market day s to Quadraple Witching)

09:30am:--Opening bull but was shortlived.

10:30am:--Pullback to find early session low.Bulls hammering the bottom.

11:30am:--A retracement to session MAV resistance.Bearish shooting star.

12:30noon:--A breakout of the morning MAV resistance line,bulls showing their spinning colours.

1:30pm:--Currently holding at bull support line.Inverted bulls.

2:30pm:--Another pullback to the bull support line,a double bottom.

3:30pm:--Another pullback to bull support line for the 3rd time.Morning star noted.

4:00pm:--Last minute spike up with a bearish hammer close.

It's time for the rollover of contracts prior to the index/options futures expiry.

Eight days before the contract expiry,the high volatility starts.The following weeks will see the bulls creeping up Tuesday's upper shadow since last Friday it was holding superbly above December month bulls pivot support.

The markets benefited from strong trade numbers in the U.S. and China and hopes Congress will extend the expiring Bush tax cuts.

A year end scramble.

The year 2010 will be coming to an end and it is normal that most of the big funds and financial instituitions will be reviewing their portfolios.

The portfolio managers are "all trying to scramble to catch up. They have performance risk, they have bonus risk and ultimately they have job risk."
Regular investors burned by the credit crisis are finally ready to embrace this stock market rally, bond exchange-traded funds recorded their first outflow since the equity bull market began in March of 2009.The ETFs, which track Treasury, municipal and corporate bonds, posted a net outflow of $501 million in November.Regular investors have refused to jump into this equity rally headfirst and opted for the low return safety of bonds are also

reviewing their positions.

Ironically, the ETF outflows began just as Federal Reserve Chairman Ben Bernanke announced a quantitative easing plan to purchase $600 billion in Treasury securities. Many investors feel the well-telegraphed move by Bernanke was already priced into the fixed income market and that economic improvement may mean the Fed Chief won’t even have to complete this buying program.

Tracking Friday's Dow.(10 market Days to Quadraple Witching)

09:30am:--Bearish 40.0 points opening gap down.Disappointing jobs report for November

10:30am:--After filling up the bearish opening gap,index fallen again but holding steadily at the bear support line.

11:30am:--Pullback again after earlier rebound to near morning high.

12;30noon:--Consolidation time,holding at the bear support line.A bullish hammer of the bottom noted.

1:30pm:--Rebound to MAV resistance line.Big Lots Inc.,the close-out goods retailer reported a 42% drop in net profit for its fiscal third quarter and lowered its outlook for the year.

2:30pm:--A bullish engulfing seen,improved risk appetite prompts investors to pick up more equities, small and midcap shares .

3:30pm:--A last half hour bullish spike up.Jobs report data a bit doubtful,ADB report says good earlier while the government says bad.

4:00pm:--A bearish hangman awaiting.

The first week of December ended on a very bullish note.A very long white candlestick.Any intermittent pullback is negligible unless another geo-political fear seeps in again.A very good Thanksgiving Day indeed.

Wall Street has shown its ability to hold onto gains, or quickly recover from losses this week despite Europe's debt woes, suggesting that investors are confident of a sustained rally.

When things don't fall apart on bad news, you know that the market is no longer vulnerable. The overall sentiment is pretty solid