Continued Stimulus Makes Investors Cheer

U.S. markets rose on Friday as investors cheered dovish comments made by Fed chair nominee Janet Yellen.

Dr. Yellen helped to reduce, or all but kill, any thoughts that the Federal Reserve would begin to taper its asset purchase program anytime soon. She all but rejected, in testimony before the Senate Banking Committee that there is an “asset bubble forming.” Yellen reiterated that it would be “dangerous not to provide accommodation.”

Mainland markets, in China, moved higher after investors received details about broad based reforms in China. Late Friday, China’s Communist Party revealed reforms which included easing the one child law, new residence registration reforms to allow people to move to industrial zones and allowing market pricing of key resources. The reforms also include further liberalization of financial markets and institutions.

STOCKS

The DJIA saw a record close for the week as did the S&P 500. Both of these markets were higher three days in a row. The Dow soared to an intraday record of 15,962.98 and managed to close at a record high of 15,961.70. The Blue Chip was up 1.3 percent from last Friday’s close. The S&P 500 was up 7.56 points to close at 1,798.18. We saw an intraday record at 1,798.23 and was up 1.6 percent for the week. The Nasdaq Composite finally saw a weekly gain after three weeks of losses. The tech heavy index rose 13.23 points Friday to close at 3,985.97 or 1.7 percent for the week.

In Asia this morning, the Hang Seng Index is currently up 2.3 percent at 23,577.51 and the Shanghai Composite is up 1.55 percent to 2168.97 on the heels of the economic reforms announced by China.

The Nikkei is up as the USD/JPY has broken above 100.00 and is currently at 100.637. The Nikkei is at 15,190.68 or 0.14 percent higher. The Australian benchmark, the ASX 200 is down 18 points at 5383.70. Many sectors saw record highs on that index, so we are seeing some profit taking.

CURRENCIES

USD/JPY (100.011) has finally broken through it multi month trading range as it is now above 99.80. We have resistance at 100.60 that needs to be broken then we target 104.00. However, we could see resistance at 101.00 which could bring some consolidations at first. A good trading strategy, for traders, could purchase a put option with a strike of 100.

EUR/USD (1.3493) is bullish, but a weak kind of bullish. We have a chance of targeting 1.3500 and then 1.3520. Still, momentum is weak and we need to keep the support at 1.3450 intact. If that breaks we can target 1.33 and lower. AUD/USD (0.9406) s at a crossroads. A move above 0.9450 will alleviate bearish pressures. Failure could bring us to target 0.9200 and lower.

COMMODITIES

Commodity space is lower today. Let us look at the metals.

Copper (3.171) is the only one looking bullish at this time after falling sharply last week. A move above 3.20 can target 3.25. Gold (1286.50) has fallen but remains above 1275. While that support holds we can target 1300. Silver (20.72) has also fallen and is still consolidating. While we trade below 21.00 we are targeting 19.00.

TODAY’S OUTLOOK

This is another soft data week but the U.S. will be release some housing data today. Investors need to pay attention to Italy this week to see if their government can survive a split in Berlusconi’s party which occurred this weekend.