Current Market Action and Bernanke's Jackson Hole Speech

We saw some interesting action on Friday as Bernanke's Jackson Hole Speech was released at 10:00am. The markets were already selling off from Thursday's highs and although Bernanke's speech didn't reveal too much more than what we already expected, the market saw significant volatility. We saw the ES trade down to 1132.75 and then rally with tremendous strength. If you want to disect the news, we could attribute the initial selling to the reaction that no additional stimulus was announced. Then you could look at the subsequent rally as a reaction to Bernanke stating that the FOMC meeting in September would extend to two days from the typical one day meeting to allow a fuller discussion. This brings anticipation that perhaps a new form of stimulus or quantitative easing will be announced in September.

Regardless of that news it looks like the market has put in a temporary bottom below 1100 (ES) and a new up-trend is upon us. I am looking for last week's high of 1188.50 (ES) to be taken out this week. Expect some brief resistance at 1220 followed by a move to 1240. I will consider unloading any long positions above 1240. ES could make a run toward 1300, getting as high as 1270-1280, but I will be looking to get short at that point if it makes it that high. What happens from there will be too speculative for me to write about now. We'll see. But for the next month I see a choppy market that will move higher before it moves lower. I expect some selling as we approach the September 20-21st FOMC meeting and we'll see if the Fed can push the market higher from there.

IN SUMMARY:
I am biased to the long side as I expect the S&P 500 to head toward the mid 1200s. 1140 ES must hold as support this week for my long bias to remain intact.