So much for the 50-day averages restraining the indexes from gains – 50-day what? The Dow, NASDAQ, and Dow raced by their respective technical benchmarks faster than Manny Pacquiáo fell to the canvas. Bulls definitely hit bears with a straight right that could draw an eight count, at least.
Perhaps, the technology led gains were an uncoiling of some depressed stocks such as Apple (AAPL). Additionally, early morning news of "fiscal cliff" niceties between John Boehner and President Obama helped stocks get off to a hot start, Unfortunately, Senate Majority Leader, Harry Reid said nothing is likely to pass before Christmas – Grinch!
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Stocks could be a little crazy today, especially after the Federal Reserve releases their plan this afternoon. Some people expect Ben Bernanke and Inkjets to announce some additional bond buying. QE4 anybody? Chicago Fed Head, Charles Evans becomes a voting member in 2013, and he thinks the digital dollar creator should be cranked up to full print mode. Evans says to let it rip until inflation is no longer bearable or unemployment gets under 6.5%. Maybe we will get a preview today?
Why not just knock another 2.5 million people or so out of the workforce and we can get below 7% without the inflation – deal?
iStock believes the Fed will announce another round of buying of at least $45 billion a month to replace the expiring Operation Twist. It will be a sort of status quo announcement, except, like QE Infinity, we don't expect the central bank to put an expiration date on this round of buying.
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Wall Street could get a December surprise, though, in today's announcement. Bernanke has warned over and over again about going over the cliff. He's has said the Fed would help, but didn't have the firepower to offset everything. But, what if he recognizes that the talks are stalling and throws a few extra bucks in there "until a deal is reached?" A preemptive dose of dollars that reduce the street's anxiety.
Much of Tuesday's gains are probably tied to anticipation of the FOMC's meeting this afternoon. If the Fed strikes the right note, we can see stocks jumping as the year comes to a close. Why wouldn't Wall Street take stocks as high as possible before capital gains taxes rise in 2013?