Wednesday, October 30, 2013

Fed Will Not Stop QE

The Fed with Bernanke has never disappointed the market.  Never.  So you know they will do nothing now, and the Street has finally caught on after the surprise no taper move last meeting.  Everyone is on to the dovish games, and they don't want to look like idiots expecting anything but more prime pumping.  But there comes a point where the market fully expects the Fed to always pump more money if you have even a slight slowdown, which is reflected in equity overvaluation.  We are in a structural high unemployment economy, there is an excess of labor, and that will give the Fed all the excuses it needs to keep QE going forever and finance the US budget deficit.

We have a setup of a near parabolic move higher since October 17, and the Fed doing nothing could be the final blowoff top which could be shortable for a one day pullback.  You don't expect two, because you have a class of investors who refuse to buy stocks on an up day who are woefully underinvested and will pile in on the first down day.  Thus making it hard for the market to go down for more than a day.

I am still a believer that you will see a huge piling into tech momentum plays after the earnings dust settles, after the fast money players playing the earnings pop get out.  It should be by the end of next week.

No comments: