Minyanville's T3 Daily Recap: Markets Start, Finish Strong on Central Bank Plan

By T3Live.com Nov 30, 2011 5:10 pm

Lackluster intraday action on Monday and Tuesday had some active traders thinking short, but the Central Bank action threw a wrench in those plans.

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All major US indices finished more than 4% higher Wednesday, holding the big gap up the entire day and roaring higher into the close. The catalyst for the move was the announcement that major central banks around the world will lend cheaply to struggling European banks in order to prevent an economic collapse resulting from the European sovereign debt crisis.

While the market held Monday morning's gap up, lackluster intraday action on Monday and Tuesday had some active traders thinking short, but the Central Bank action threw a wrench in those plans. Sometimes, it turns out, it's better to be a long-term investor. While this policy measure will prevent immediate calamity that could have resulted from last night's bank downgrades, it likely will only delay the inevitable result in Europe.

While short term I was eyeing short yesterday, we have continued to highlight stocks showing relative strength in our Off the Charts newsletter. These stocks, I believe, can be owned on a longer-term swing basis based on their technical strength.

MasterCard (MA) and Visa (V) continue to be strong after favorable legislation in late June regarding debit card fees.

Tech-shy Warren Buffett made a large investment in International Business Machines (IBM), adding further conviction to an already strong chart. Intel (INTC) is hardly the old dinosaur many thought it to be last year, and looks poised to head higher. VMware (VMW) is the most compelling cloud stock and continues to be resilient. Qualcomm (QCOM) is another tech bellwether wedging near highs.

Wal-Mart (WMT) is close to highs and should be boosted by what looks to be a strong Christmas shopping season. Macy's (M) is another retail stock, a slower mover, that looks healthy technically. My favorite patter in retail right now? Nike (NKE). With today's open it is busting out of a very nice upper level descending channel. Deckers (DECK) is another strong retail stock to watch.

Caterpillar (CAT) is close to breaking pivot highs, and responded to today's news extremely well. Panera (PNRA) busted out of an upper level consolidation and looks ready to run. Las Vegas Sands (LVS) should finally break out of its macro wedge pattern if the market cooperates.

Humana (HUM) is my favorite patter in the health-care sector. Starbucks (SBUX) remains in a steep uptrend and seems destined for greater things.

McDonald's (MCD) is a must-own stock, in my opinion, busting out to new highs today.

Gold (GLD) and miners should run sharply higher over the next few months following this highly inflationary move from the Fed announced today. My two favorites are Goldcorp (GG) and Newmont Mining (NEM).

Overall, today's announcement should trigger a temporary rally in equities, but who knows what the long-term ramifications will be. Today's was powerful and the next S&P resistance to watch will be 1252-1256. Then the area that failed a few times a few weeks back around 1260-1266 will be the next level to watch.

These are crazy times we are living through. We can’t control the markets, only our actions.