Historically, the “Optimal Momentum” concept of buying the best performing asset class out of a basket of loosely correlated asset class’s has annualized a return of 17.2% since 1977 with a maximum monthly drawdown of -25%. As a comparison the S&P has only annualized a return of 8% with a maximum monthly drawdown of -52.5%.
Euro Momentum Takes Out 1.3049 Fibonacci Objective
A strong surge in upside momentum this morning drove the Euro higher and straight through a Gann Angle/Fibonacci Level Cluster at 1.3044 – 1.3049. The market has since peeled back after the break out and is now resting on this cluster. Traders should watch this area today for direction as it is most likely to act as a pivot.
Upside Momentum could Trigger S&P Rally to 1105.75
Larry McMillan's The Option Strategist Weekly Updater 4.16.10
posted with permission from Larry McMillan's OptionStrategist.com
The market continues to march higher, in a slow plodding manner. Most days recently have seen another new rally high for the SPX and most other major indices. This is certainly positive from an intermediate-term viewpoint, as the momentum and trend are bullish.
Euro Upside Momentum Falters after Gap Higher Opening
Today, Fed Chairman Bernanke will continue his testimony before the House Financial Services Committee. Yesterday he said the U.S. economic recovery has been “nascent” and requires low interest rates to help it sustain growth. He also said that low employment and subdued inflation allow the FOMC to keep downside pressure on interest rates.
The U.S. stock market rally stalled after an early morning surge following dovish comments from Fed Chairman Bernanke. In his testimony before the House Financial Services Committee, the Fed Chairman reiterated that interest rates would remain low for a prolonged period of time. While acknowledging that the economy was improving, Bernanke did say that high unemployment remains a concern.