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Minyanville's T3 Morning Market Call: Bank of Japan Joins the QE Party

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Also, oil saw a 3% spike down during Monday's session that baffled some traders, but now many are pointing to a confluence of factors weighing on oil.

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US stock futures have a positive tone Wednesday morning as the Bank of Japan joins the QE party. The BoJ, following the announcements of new bond buying programs by the ECB and US Fed, announced today it will make an additional $126 billion in asset purchases in hopes of stimulating a slowing domestic economy. Additional purchases were expected from the BoJ, but the size of the new program may not have been factored in. The yen dropped versus a basket of world currencies, a development that was welcomed by the BoJ.

European stocks advanced for the first time in three days, but retreated from highs of the day after news that German lawmakers are working to limit the ECB's proposed supervisory role under the EU's proposed plan for a region-wide banking system. In addition, concerns still linger regarding the territorial dispute between Japan and China. Some officials in China, Japan's biggest creditor, have proposed dumping Japanese bonds in retaliation to the country's pugnacity.

Over the last two days, the market has digested the recent breakout well, and the 8- and 21-day moving averages have been able to play some catch-up. It is important to allow short-term moving averages to catch up to price following rally extensions. The McClellan Oscillator went from +60ish Friday to less than 30 after yesterday. During this digestion process, leaders were not just sitting around; many were making new highs.

Microsoft (MSFT) remains largely unchanged this morning despite news that the board has approved a plan to hike the quarterly dividend by 15% to $.23 per share. Microsoft may not be the growth monster it used to be, but presents investors with both price appreciation potential and a very solid dividend.

General Mills (GIS) is up 2.5% pre-market after reporting that fiscal first quarter profit rose 35%. General Mills is not a stock that comes on our radar to trade often, but it has a bullish set-up as it opens out of a base. 52-week highs are not out of the question today.

Oil prices continued their decline overnight, which we often track using the United States Oil Fund (USO). Oil saw a 3% spike down during Monday's session that baffled some traders, but now many are pointing to a confluence of factors weighing on oil. Demand is weak as the world economy slows, and the White House could be prompted to release strategic petroleum reserves amid rising tensions in the Middle East.
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Scott Redler is long AAPL, GOOG, LNKD, FB, MCP, XLF, MSFT. Short SPY.
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