A Technical Look Moving into Next Week

by Jared A Levy

Telescope, looking forward The Federal Reserve partially confirmed Tuesday what we already knew (with respect to the state of our economy) and failed to change interest rates.  Ben Bernanke et. al. did, however, state their intentions to begin using the proceeds from maturing mortgage bonds acquired during the crisis to keep its holdings of domestic securities around $2 trillion.

While this certainly isn’t true easing of monetary policy, but rather prevention of tightening, the act seemed to be interpreted as not enough action on the FOMC’s part to bolster our ailing economy.   Are economists ever happy? 🙂

Wednesday’s worse-than-expected trade balance number coupled with a slowdown in Chinese factory production sent the markets sharply lower, violating some key short-term technical levels, mainly in the S&P 500 Index.  What I also found interesting was a Wall Street Journal/NBC news poll revealing that almost two-thirds of Americans still believe the economy is on a downward slope and has not bottomed out yet. These new results are much higher than the 53% of Americans who felt that way in January. The poll also showed an extremely high distain for our friends in Washington.

As a shorter-term trader, I tend to capture a quick snapshot of the macro economic climate/sentiment at present and find what, if any, catalysts might change those assumptions in the next couple weeks.  At the same time, I examine the upcoming economic and corporate data announcements for the same reasons.  Finally, I use technical analysis to research specific securities and then apply the appropriate options strategy based on my findings.