So, what caused this massive 1 hour, 500 Dow/100 NASDAQ Comp point rise yesterday? Was it some Belgian bank? Was it the FT rumor of Euro-bank reorganization? No, and no.
When Bernanke spoke yesterday he told of a dire economy, one that is “faltering”. He has officially given up on economic repair or growth with the current status quo. Directly after those comments were made is when markets initially moved away from their new yearly lows, in Bear Market territory.
As you know, I tie much of the recent market weakness not to Europe or banks but rather on no free QE3 money. It was no coincidence that the most correlated assets, stocks and commodities, took a major leg lower once September 21 came and went without more stimulus for Wall Street. And then it hit me. The massive rally is the sole result of someone believing that Bernanke will relent and begin QE3 this quarter.
Think about it. Why else would the reaction be so extreme? Sure, sentiment is Bearish and has been for some time. And yesterday we made a new range low for the year, just below the intra-day drop on the panicky day just before S&P downgraded the USA. And remember, that day witnessed a 70 minute 70 point rally in the $SPX in the last hour of the day. Coincidence?
We are still in the bottom of this trading range that we’ve been in since falling from our Distribution peak earlier in the year and there remains significant overhead resistance just ahead. My guess is that there was a significant liquidation going on for the past few weeks culminating with yesterday. The impetus is that the stock and commodities markets are again “reading between the lines” of Bernankes comments and committing to a new round of free money. Watch it happen…
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great post, thank you much.
I must say, it makes more sense than any of the other silly rumors or news out there…
I dunno about that. If it was truly a QE hope rally then I would have expected it to be led by precious metals, but the action in Silver and Gold yesterday and today was pretty wimpy.
^ Agree completely with this one. Any explanation for the metals, Scott? Thanks in advance and keep up the great commentary!
so a few hundo down,next day 75 up. then again and again. not between the lines, but more like a cry baby jumping up and down,yelling at the clam that they gots to have their lollipop,or they just keep crying.while the clam says,no, not till you eat your pea’s,and in the back of the clams mind,just like any other parent knows in the back of their mind,you still don’t get no lollipop. the bots would have to lose about 1500 pts on the dow in less than a week in order for the clam to react,and if he doesnt like you post,then the panic will begin
But we make one more new low first no?
you know what? I just don’t know. I can’t tell you with any confidence or certainty. It is certainly possible. but maybe not.
I think we are all reading too much into a technical bounce. He needs oil around at $70 or below and gold < $1500 before announcing QE3. Otherwise the economy will collapse within months of the announcement. Market will turn back down in 2-3 days.
I hope you are honoring your stops.
Scott, I respectfully disagree with your analysis. We both believe its a belief of an upcoming QE, but I don’t think the market believes it will come from the Fed…but instead out of the BoE and ECB when they meet tonight. The Bank news just sparked hope that both of them were changing their tune and would be QEing Europe Style. We will see. FWIW, Inflation and just the overall lack of focus should lead to no major QE plan out of them.
equeeze me? Where do you think they’ll get the lions share of any “real” cash when they eventually do it?
From us of course, but it is their”fed” announcements tonight..not ours, that have the bulls all excited about QEing hopes.
Well us and China…maybe more China.
Actually the only real cash is Yuans after pondering it.
so we had at the beginning of the year a list of potential negatives including soaring oil prices likely to hit the US economy, then an earthquake in japan, the ongoing crisis of eurodebt, pointless and unnecessary panic over US debt (but panic nonetheless), a weak and weakening dollar that was destined to have a good run for awhile, and china and its imminent implosion, or speculated implosion, and a really overbought and complacent market, and subpar GDP growth.
earthquake: seems ok, the world isn’t ending after all
rising oil prices: murdered by another deflationary panic. so we could check that off the list except speculators will be back to run prices right back up if we get a little ‘risk on’ action for awhile… half check.
dollar: its at least shown some strength, so we could half check that off the list of reasons for caution
eurodebt: unresolved, but at least its emminently on the mind of Mr. Market so it can probably be half checked off as well
China: its markets are falling and basic materials stocks look like knife art, but i don’t think its checked off, maybe its half checked off, but it hasn’t come to the headlines, the forefront oft he markets mind yet, so we’ll call that one open.
US economy weakness: greater fears of this than ever, but at least its on the markets mind in a big way, so I’ll go half a check.
Panic over US debt: check
So out of 7 mega worries, we have about 4 checks, the biggest ones (china and europe) are probably about 25% checked…
Still kind of a mess, but gun to my head the market will take off before we’ve checked all 7 blanks… But we probably need to check another one or so before we really get moving.
Also consider that Joe Biden stated that this economy is the Obama economy now… QE3 was my first thought.
I appreciate analysis of a situation that I would have unlikely come up with myself, however… I try not to assign market movements to headlines, events, or subtle nuances in a speech. That gets my mind involved with the price action, and the more can rely on price for decision making instead of my beliefs, the better.
So as I watched the market yesterday, it was simply a crescendo or bulls buying, or bears covering, which induced panic on both sides (losing money, and missing opportunity).
“And then it hit me. The massive rally is the sole result of someone believing that Bernanke will relent and begin QE3 this quarter.”
Well, since UN Agenda essentially mandates the destruction of the US dollar, in order to move middle class Western wealth to developing countries, it’s a no-brainer trade, IMO.
The BIS, World Bank and IMH have all gone on record to support the destruction of the US dollar. In addition, there’s no other way to bail out the CDS debt than to dilute currency.
Not rocket science, IMO. Pretending that QE3, QE4, etc will not happen is part of the Fabian socialist theatrics, the inevitability of gradualism, aka to boil the frog in water, you must first distract him and also take your sweet time about it.
your movement of middle class, to no class isnt gonna happen in 3 hours like you think. it’s happening over the course of many years,it’s just now coming to a head which will take some more time. how long do you think it will take to “unwind” the middle class without an immediate riot. there wont be qe anything. bull shit i say.the last “hope” in changing anything,would be a check written to the people, no strings attached, without a stunning move,in getting the moral positive in america would be just that. and that wont happen. the clam has already said, and hinted, that it is up to the policy makers to now seek a resolution,but the volleys, and rumors just continue,thus the only thing driving the market as of late. if there was no qe,right now appl would be a 65 dollar stock
If you read my post I am not suggesting this move will take 3 hours or anything less than decades. The market is responding to the theatrics of pretending the wealth transfer is not happening at all. It’s a rigged game, entirely for show to prevent average Americans from going after central bankers. What’s interesting though is that despite this level of manipulation, technical analysis still works to some degree.
Interesting. Makes a lot of sense.
Expect the following:
1. Global QE
2. Global TARP
3. Global Hyperinflationary Depression
It’s in the bag!!
http://www.globaltrendanalytics.com/
nothing on thish planet is pointing to hyperinflation right now
No QE in Q4. Bernanke is not dumb. He was the fall guy last time the market took a dump. This time he’s giving the EuroTrash and Democrats enough rope to hang themselves.
agree on no qe3
“We support the shift of our economic focus from translational corporate “fusionism” to regional subsistence. Subsistence economy focuses on a “natural” way of living. This is not “back to stone age”. It rather means a spiral, wavelike progress out of the life-destroying habits of today’s so-called civilization and accepting and welcoming the complexity of life.
We support the development of sustainable, decentralized, that is local, high-tech production, combined with local use of local resources. and the redesign of our monetary system according to a fourfold model: 1) economy of gifting (a basic matriarchal feature), 2) counter-trade (barter) economy, 3) complementary local monetary systems for regional trade, and 4) unified currency (for example called “terra”) for interregional and global trade. In our eyes compound interest has to be abolished. Also the concept of “owning” land must be reconsidered.”
http://www.worldshiftnetwork.org/action/subsistence.html
The Club of Budapest is an organisation formed by the Club of Rome to promote the cultural and spiritual aspects of its agenda. Likewise the CoR formed the Club of Madrid to promote its political agenda.
The Club of Budapest convenes itself under the rather ostentatious title ‘The World Wisdom Council.’ Members include the Dalai Lama, Desmond Tutu, Mikhail Gorbachev, Arthur C. Clarke, Mary Robinson, Jane Goodall, Karan Singh etc. The CoB has established the World Shift Network which has the stated aim of helping to transform the planet earth.
So, what exactly is the Club of Rome and who are its members? Founded in 1968 at David Rockefeller’s estate in Bellagio, Italy, the CoR describes itself as “a group of world citizens, sharing a common concern for the future of humanity.” It consists of current and former Heads of State, UN beaureacrats, high-level politicians and government officials, diplomats, scientists, economists, and business leaders from around the globe.
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Fully documented and a done deal. The CDS blow-up was intentional to bring down the house of cards and create the landscape necessary for wealth transfer, dollar destruction/replacement, and the rise of Fabian socialism (aka, communitarianism).
I don’t think there’s any question at all that the next ramp will be Bernank-created. Either by implimentation of actual QE3, or by inference that it’s “in the works.”
No question whatsoever. What other choices has he arrayed before him?
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