A Little Help From the Fed

 | Apr 03, 2012 | 4:33 PM EDT
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I've been lamenting the lack of volatility and drama in this market, but the Fed helped today with two little letters: Q and E. The minutes of the last FOMC meeting were released today, and the comments made it clear that a third round of quantitative easing is unlikely unless the economy weakens.

Market participants who embrace the deadly sin of gluttony would prefer endless inflating of the market through endless quantitative easing. That might not be good in the long run when inflation starts to ramp, but who cares as long as we are making money today, right?

Many market players still believe that the Fed is going to find an excuse for more quantitative easing at some point, and that helped prevent a full-fledged panic today. Quantitative easing works better when it isn't highly anticipated, so there are some benefits to lowering expectations about its possibilities.

Aside from the Fed, the most notable thing about the action today was how mixed it was. Big-caps like Apple (AAPL) and Priceline (PCLN) keep chugging along, while small-caps struggle. Breadth was better than 2-to-1 negative. There was some buying, but it was much narrower. It is refreshing to see individual stock-picking, rather than the highly correlated action we have had at times; however, it took some effort to find what was working.

As I commented this morning, there have been some cracks developing in the market and the action today widened them slightly. The big-caps, AAPL in particular, covered up some of the weakness, but there was quite a bit of churning and the weakness has been expanding.  We still have underlying support, as you can see from the late bounce into the close, but it doesn't hurt to keep things tight and be careful about giving back gains.

Have a good evening. I'll see you tomorrow.


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