DJIM #8 2010

After digesting the FED discount rate hike on what was actually timid selling, the overblown news was bought up and new high of 1112 on this rally was reached.  The ability of the market lately to absorb negative news flow and go on was prevalent once again. The market was able to take the hike in stride as a probability discussed.  Simply, the FED is on hold and Bernanke’s 2 day testimony this week will reinforce this and the market sooner than later will have to go and realize it’s premature to think a hike in 2010.   What we’ve been more concerned about last week is the reaction in China to their Banks RRR raise after their market re-opens.   But, as we pointed out late Friday, the fact we’ve been able to shrug off the US hike and also rally on the week might temper an initial negative knee jerk reaction.   This seems to be the case tonight as Shang trades flat.   If this mild reaction continues this week, it will be a positive catalyst.

Bernanke’s testimony, China and a very likely multi billion bond offering in Greece will be the catalysts this week.