General
Quiet trading continues as the market eagerly awaits the Federal Reserve's annual meeting in Jackson Hole, Wyoming this Friday for more clues of renewed quantitative easing, commonly known as QE3, from Fed Chief Been Bernanke and ECB head Mario Draghi, both of whom are scheduled to speak at this event. Economic news remains non-existent, with the only potential news catalyst for the market coming from the Republican National Convention. As we've discussed before, while investors are "looking to the left" in expectations of another round of money-printing to fuel the markets higher, the market could "run to the right" as it finds a reason to continue the rally based on real change coming into play in the November election. The convention could give Romney the opportunity to make his case even more clearly to the American electorate and increase his personal appeal which the market could view positively. We still believe the potential for a "Romney Rally" remains a distinct possibility as an upside driver for this market. So far, from an objective, technical point of view, the market simply continues to consoildate the strong gains it has made so far in August, and the action in this regard appears normal given the context of the prior, sharp rally.
Building the case for impending QE, gold and silver both remain strong and above their respective 200-day moving averages, a key technical level. Again, we would use any pullback in gold to the 1648 level as a potential opportunity to pick up shares of gold ETFs.
Meanwhile, the action among leading stocks remains relatively quiet, with AAPL's gap-up move yesterday remaining one of the key highlights. The court decision against Samsung may be critical for Google (GOOG), which has remained above a recent breakout. In any case, those who have wondered what sort of catalyst could drive AAPL to the $700 level now have their answer, and it is likely that such a sweeping decision against Samsung was not the catalyst investors were expecting.