Dartline™ First Look – morning directional planner
March 16, 2010, 7:00 am EDT — … The Standard & Poor’s 500 index futures up 2.50 to 1148.20, as Britain’s FTSE 100 up 0.7 percent, Germany’s DAX index up 0.7 percent, and France’s CAC-40 up 0.9 percent. Bernanke concludes a meeting where he is expected to keep a key interest rate at historic lows. Near zero interest rates is the flavor of the year with limited adjustments. Meanwhile the carry trade will keep pumping free money into stocks and the only reasons to buy paper. The SPIN that if the economy improves the Fed will need to start increasing rates to fight expected inflation. Wrong: Inflation will remain low as real unemployment remains over 16 percent. Indeed, whatever the Fed’s statement after its meeting, Stockville will be encouraged. The Fed has repeatedly said inflation is not a near-term problem, and it plans to keep rates low for an “extended period.” … The Commerce Department report due at 8:30 a.m. EDT.is expected to indicate housing construction likely slipped in February because of bad weather across much of the country. Economists polled by Dartline predict housing construction fell 3.6 percent to a seasonally adjusted annual rate of 570,000 last month. Construction activity hit a six-month high in January. The report is also expected to show applications for new building permits fell to an annual rate of 610,000 units last month from 621,000 in January. Applications are considered a good sign of future activity. A collapse in the housing market helped push the economy into recession. A recovery has been slow and bumpy, which has helped to keep a broader economic recovery in check. … Bond prices dipped ahead of the Fed’s meeting, pushing interest rates higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71 percent from 3.70 percent late Monday. The dollar fell slightly against other major currencies, while gold and oil up. … — With the S&P 500 index near resistance at 1150.41, how it reacts at this juncture will indicate direction. Not the time to guess — wait for reaction and act accordingly. The problem: Limited new money entering the market. Until that happens, no conviction to direction.