Although we had two major news events to digest today, the indices ended the day with just minor gains. Under the surface, things weren't so sanguine. We reversed course several times and had a number of swings following the FOMC decision that gave the market the QE 2 for which it had been waiting.
The election news and the speech by President Obama were pretty much as expected. The market got the gridlock it wanted, and the President sounded like he was going to make some efforts at bipartisan solutions to our economic woes. It certainly is an improvement over what we've had and could be a longer-term market positive -- if the politicians actually live up to their promises.
The Fed announcement was also pretty much as expected, with the quantitative easing being big enough to satisfy the bulls. The Fed did manage to surprise quite a few folks, however, by shifting its buying from longer-term bonds to shorter maturities, and that caused some major ripples. The normal correlation we have seen lately with a weaker dollar causing strength in gold and bonds came apart, but stocks seemed pleased with the news.
Things become more dangerous now that the news is over and folks are thinking that there is no longer any reason to worry. It is when the triggers for selling aren't so obvious that the bulls can be caught by surprise. Keep in mind that we have monthly jobs numbers on Friday morning, which is going to be very important.