(By Rich Bieglmeier) Well, as Ronald Reagan used to say, the Federal Reserve did what everybody expected and replaced Operation Twist $45 billion a month in bond purchases with $45 billion a month in bond purchases. As we sarcastically speculated this morning, the Fed adopted Chicago Fed's Head Charles Evan's approach of tying easing to 6.5% unemployment and 2.5% inflation, whichever comes first.
At first, the street reacted positively, only to watch enthusiasm fade as the clock ticked towards the closing bell. By the time traders wrapped up hump day, the NASDAQ and Dow finished in the red and the S&P 500 barely treaded water. Since it was more of the same, Wall Street flattened out.
Investors will get two news announcements today that could help the market get back on track. Before the market opens, Jobless Claims will be released. Economists think this week's result will match last week's total of 370,000. Now that Sandy has worked its way through unemployment claims, we expect initial claims to hug estimates +/- 2,000, once again.
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Retail Sales for November will join the pre-market parade at 8:30 a.m. EST. In Monday's i On the Market we wrote, "The street anticipates a 0.6% jump in spending for November. So far, retail sales numbers for November have been a little lighter than expected. Car sales, however, have been jumping. November was the best November for auto sales in the last five-years.
Take out autos and trucks and economist think spending was flat in Turkey month. Inside the Personal Spending & Income report was a disappointing spending result. We could see another on Thursday." We are sticking to it.
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Should bulls get the sort of news that inspires the buy programs, the indexes could be positioned for a nice run. As you can see on the NASDAQ chart below, the index just completed a small triangle pattern, and has the potential to draw a much larger version with better than expected economic reports.