Based on what happened after QE1 and QE2, traders are salivating over how much the market would go up after QE3. But you can't give all the credit to QE for rallying the markets in 2009 and 2010. The market was depressed in both instances, and was ripe to rally on any sign that the economy was stabilizing. Right now, the market is not depressed, it is only 5% off the highs for the year, and we're at 1350, not 800 or 1050. Big difference. And earnings are slowing down, not rising like 2009/2010. We're in a different point in the economic/investor cycle. We had the panic in 2009 and the bottoming of the economy, and the natural bounce back from recession. But now the recovery is 3 years old, and more importantly, the investor cycle is much more complacent than in 2009/2010. Did we have traders regularly use the term BTFD in 2009 or 2010?
It is a different animal now, the transformation from bull to bear is occuring before our eyes.
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Yes, but the crowds were very bullish in 2007 too.
Yet, I got burned for months trying to short the market, until I gave up.
And then it tanked, of course.
My point is, if you're short now, you you might have to suffer for some time.
We'll see.
Yes, I realize that I could be early but this kind of complacency is usually present in a strong uptrend, not when we are range bound.
In any case, a QE announcement is not likely to happen when we are at 1350. If it happened from these levels, The rally would die out within a couple of weeks. And The market would go down sharply afterwards.
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