Ben Bernake spoke in Boston last night, and his comments during the Q&A session were very dovish regarding future monetary policy. What was said is seemingly the opposite of the verbage from the last Fed meeting, but markets took the testimony very positively. As a result, futures ripped higher until about 6:30 last night. From there, they’ve chopped sideways in a tight range, but are holding all of their gains. At present levels, the Nasdaq is leading markets higher, up about 1.6% on the session. The Russell 2000, S&P 500, and Dow are all trading about 0.9% higher on the session. The big winners from Bernanke’s speech are metals and miners–gold is up 2.3% today, silver is 4.5% higher, and miners are up by about 5.5%. Given the dovish tone to last night’s speech, the dollar sold off sharply, which is a big reason for the strength in metals today.
CHART OF THE DAY
Pandora (P) – The online radio site was very strong lately, but took a hard hit over the past few days. Despite selling off about 10% from its recent highs, the equity is still up by about 100% for the year. The recent pullback near the previous resistance levels from late May could now signal support going forward, and offer a nice entry on the long side. Despite its strength, short interest remains at over 23% of the equity’s float. This creates the potential for strong short-covering rallies going forward, should P continue its uptrend.
I like a long entry here with a stop placed on a close below 17.30. I would initially target a move back to 20, with 22 as a stretch target.
WHAT I’M EXPECTING
Given the positive reaction today and the market’s ability to hold its gains, I’m looking for a move back to the all-time highs on the S&P 500 at 1687. From there, the round-number 1700 level could act as resistance. Below, I would look for 1660 to act as support going forward.