Gap fill at 1280 next?

My conclusion after going over some key leadership stocks is that the gap should fill, I do not think there was a true inflection (acceleration point) since that gap opened. The breadth and sector leadership were too weak since that gap was opened. The market had a quick influx of short interest and it was able to squeeze them for a parabolic blow off, but this kind of action usually weakens the supports (and we had a sharp sell off as a result of it).

Very interesting, but only IF you first assume the flood of liquidity that this little lemma will occasion from the FED will be ineffective.

The Fed has variable insertion rates and today we know they must be looking at just how tolerate they should be of market free will being allowed to prevail. allow a little correction.

Oil is up today, again, and it may call for heavy Fed stimulation. The Fed fears 4+ gas, it would ruin all the prior efforts to save the markets.

Oil is up today, again, and it may call for heavy Fed stimulation. The Fed fears 4+ gas, it would ruin all the prior efforts to save the markets.

All forecasts of Fed are based on the current banking assets and not quite related to any external shocks. Oil was up a lot yesterday despite the sell off, it was hard to miss it, I think there is a geopolitical premium pricing into oil now. This is probably why the market didn't like the further liquidity from Fed and the market probably knows that if the democracy comes to Arab countries, the price of oil will only go up and the inflation will soar in US, especially if Fed continues to throw gas to the fire.

Fed is done for all practical purposes and QE 2.0 is already priced in for perfection.

Edited by arbman, 23 February 2011 - 11:50 AM.

BTW, it must be sheer luck, I recommended to a few clients to buy XLK puts and XLE calls last Thursday morning.