Thursday, February 21, 2013

Ignore the Fear Mongering

Yesterday was quite an interesting day.  The volatility finally picked up thanks to gold, oil, and the Fed minutes.  I don't believe for one second that they will remove QE until you get a big improvement in the economy.  A big improvement in the economy would lower the budget deficit and put less pressure on the Fed to monetize the growing government debt.  But I don't see the economy making a big improvement so I am forecasting endless QE. 

It is never about inflation with the FOMC.  They never tightened when you had rampant inflation in 2007 and early 2008 so do you think they will tighten just because of rising  inflation?  Fat chance.

The selling in gold yesterday was quite panicky, and I see a strong bounce from the lows to above 1600.  And I am still a raging bull on the SPX.  Today is probably the day to buy the weakness looking to sell next week for a quick 20 pointer.  Forget the fear mongers using Fed minutes / Italian elections as an excuse to sell.  You have to buy these dips.  They will not last long.  

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