The DJIA managed to keep its winning streak going by a slight margin, but it was a very mixed day for the market with 2,100 gainers to 3,500 decliners. There continued to be some big-cap momentum that helped to hold the indices up, but a fair amount of profit-taking occurred in some of the highfliers.
The main news today was the Fed, and the Fed is all about quantitative easing. Everyone knows that it's not a particularly good thing that the economy is still so weak that the Fed may need to provide "additional accommodative action," but as we've seen over the past 18 months, the liquidity provided by the Fed can keep this market running for a very long time. The bears are understandably a little worried about jumping in front of $2 trillion in new buying power.
The biggest problem for the market right now is that we are extended, and it isn't as if the inclination for the Fed to give us QE II was unknown. We have been pricing that in for the past three weeks with a big run. We still don't know when the Fed might make a move which does give the bears a little room to try to push us back down in the near term.
The key technical level remains 1130. We are still above that, but we are due for a day of selling soon. With the Fed out of the way and talk that the economy is still so poor that we need to print dollars endlessly, it will be a good opportunity for the bears to show us if they have any firepower.