Bernanke Rally

April 27, 2006 · Print This Article

The day started lower on news of a rate hike in China, however, Bernanke saved the day by stating, “there’s always the possibility that, if there’s sufficient uncertainty that we may choose to pause simply to gain more information, to learn better what the true risks are and how the economy’s actually evolving.” This led to a sharp rally in the major indices, especially the S&P 500. The rally led the S&P into overbought territory intraday and as expected it was unable to hold at those levels. Could this be the final stages of the 2006 bull rally? Or is it the beginning of a sustainable move to historic highs. I tend to side with the Bears, at least for the short-term. With the summers months right around the corner and lots of noise to overcome in the market, I still think we are due for a correction in the coming months. But this does not mean that I think we are in for a catastrophic collapse. Yes, there are some valid economic concerns out there right now, but that is always going to be the case.

RSI Wilder (5) for April 27, 2006