Courtesy of Steve Reitmeister, Executive VP, Zacks Investment Research quoted from Zacks.com Profit from the Pros - 6/24/10
Technically speaking, the market looks bad given a 2nd straight close under the 200 day moving averages. Fundamentally speaking, I did not care for the change in the Fed's language today. They are no longer saying that the economy is "strengthening". Rather they said that the economic rebound is "proceeding". This may sound like semantics, but the Fed is VERY particular about their choice of words and this marks a clear change in their sentiment. To make matters worse they stated; "financial conditions have become less supportive of economic growth ... largely reflecting developments abroad (read: Europe)." The smart money took this as a signal to move more cash to safety as can be seen by the further drop of the yield on 10 year treasuries to the lowest level since May 2009 (when it looked like the world was going to fall off a cliff). And perhaps many investors feel that is going to happen again. So I am taking this as a sign to lighten up my long positions. I even added a hefty ETF short position into the mix. I believe it will be hard for the market to press higher until we get forward looking guidance from Corporate America that makes us feel better about the economy. That won't happen for another few weeks. That says to me that the market is more likely to head lower over the next few weeks.