Markets Poised For Stress Test Results

If my chart reading skills are correct, the markets are going to look very good for investors over the next few weeks. There is an opportunity for it to scream very hard upwards. The catalyst? Better than expected results in the Fed's stress test. No bear would want to take on the Fed if that is the case.

There's likely to be some good apples and bad apples in that report. With the report to be released Tuesday but not publicly made available until Thursday, you would think that everyone would be able to see the data at the same time, not just a priviledge few. Isn't it our money that is being used to pull these banks out of a hole? The report better be damn good!

You wouldn't think all 19 passed with flying colors, do you? That would be like the mother of all news to make the Dow soar 500 points in a single day. But that would be bad in my opinion. Volatility is not what we need here in the markets. What we need is confidence and one with gradual steps upwards in tandem with economic improvement, not a financial sector that was ruined and given a "Defcon 4" alert system. We are by no means out of the woods in this economic "depression" mired in debt.

What maybe a little unsettling to some pessimists is the notion that a few banks are acting in a zombie fashion by not lending out. Perhaps that perception is unwarranted if it is simply a matter of the banks not giving out loans to poor candidates because they just don't qualify. What a concept eh? Even if the money supply is tight, savers aren't actually being rewarded either at paultry 1% APRs. I mean, so someone gets to wipe out all their bad little bets and be replenished anew with cash and sit on it. So what if the little guy sits around waiting for HIS handout.

Anyway you look at it, there is going to be some interesting trading here at the 900 level on the S&P 500. I totally expect volume will continue to be low and prices continue to rise with maybe even a heavy spike in there somewhere.

To keep the bears at bay, on Tuesday, the SEC is due to convene to discuss the practice of shorting and the potential for short circuit breakers.

In the meantime, its up up and away.