Courtesy of John Nyaradi
.jpg)
The Federal Reserve had a busy day saving the world today as they bought more than $9 Billion of assets in their ongoing Permanent Open Market Operations and extended the temporary, emergency dollar swap lines with the European Cental Bank, Japan, Switzerland, Canada and the Britain.
This action appears to be in response to ongoing strain in Europe as Fitch Ratings announced they might reduce Greece’s credit status to below investment grade and Moody’s is considering a downgrade of Portugal. The Fed seems concerned that the European “contagion” could still spread to the United States in 2011.
But this potential threat was largely ignored at home today as the S&P 500 (SPY) rose to levels last seen in September, 2008, before the Lehman Brothers bankruptcy, oil (USO) hit a two year high, the long Treasury (TLT) gained along with the U.S. Dollar (UUP)
Technically, as we head into the closing days of the year, the markets remain overbought, overstretched and complacent with the VIX (fear index) at levels last seen just before the May “flash crash” and investor optimism at bullish extremes.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
Pic credit: William Banzai7
