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It is my belief there will not be a QE3 in any major form until after the election.
QE3 would help Obama. Republicans control Congress, therefore there will be absolutely everything possible done to not help Obama.
FOMC is under the purview of The Fed, which does not require Congressional approval (except for raising the debt ceiling). But I still believe there is enormous pressure on them to postpone QE3 until after the election.
We've already seen that FOMC caters to big business and banks, the same that Congress caters to, so it seems like their best interests are served if Obama is not re-elected. And one sure fire way would be to watch as the economy goes off a cliff between now and the election without endless Fed money to prop it up.
Now don't get me wrong. I'm all for a proper correction, and against The Fed pumping it trillions more into the system. But what bothers me is the politics of it all.
You maybe right Mike but I wonder if the fed won't try another operation twist kind of thing in the mean time.
Politics for sure plays a role but I think Bernanke will crack under the pressure of seeing the markets falling apart and step in with some version of QE or something. I guess it just depends on how low the stock market falls...he must have some kind of number in his head.
My point is there would be some number that is so bad that Bernanke feels that he HAS to do something.
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I agree with you Mike. I've been of the opinion since the failure of QE1 and QE2 that there will not be any further attempts to try and prop up the markets as they have. What has happened as I've said countless times is the Fed has created a situation where the market is leaning on the "Bernanke Put" to continue to push the market higher. This option seems to be going farther away with every Fed announcement.
The market needs to correct so that real buyers will come back in once price reaches a fair value. This year's entire run up has been on low volume but greatly influenced by the global central banks' effort to inject liquidity into the markets. We're now seeing what happens when the drug addict can't get their drugs. They become very sick. It's time for rehab!
With regards to the low volume for this rally, the market can easily cut right through those previous levels as we're seeing right now. What people are thinking is support is really just thin air. If you look at the ES, you can see that the market has dropped below two key balancing areas. Since we've dropped below, the velocity of the move down has substantially increased which supports my theory of thin volume. I don't see there being much support until we get down to the 1240 - 1260 area where there was some noticeable balancing down there.
The 200 DMA is sitting at around 1275 but the slope is pretty flat meaning, it could be pierced. Halfway back from the October low is around 1243 which also plays into my theory. We also have a sizable gap down at the last trading day of 2011.
For me, everything points to a test of this area regardless of what Fed or any political events may come about. In fact, I would view another QE as confirmation that everything the Fed has said recently is completely false and would view that as bearish vs. bullish. BTW, if we get a new president (which I'm hoping for) Bernanke is gone. My only hope at that point is that they bring in a non-Keynesian. But I won't hold my breath on that one.
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I still see the oil poll . but say yes... probably in the next 72 hrs....
"Successful trading is one long journey, not a destination" Peter Borish Former Head of Research for Paul Tudor Jones speaking on conversations with John F. Carter
