OMG..OMG..We’ve Given Back Our QEinfinty Gains

Some perma bear wishers poked their heads out of their turtle shells on Friday opining that we have lost out gains since Bernanke’s QE to infinity proclamation. OMG

Not so fast I say to those pundits that have been completely wrong and are still “waiting” for that pullback to get long. Don’t get me wrong, there will be corrections along the way, but I see a 1700 print on the $SPX next year.

I say this based on nothing that is good about our economy. As a matter of fact, the numbers I’m seeing look down right recessionary. There aren’t any jobs and people our whipping out food stamps like a Visa cards to pay for their grub more and more.

Housing “stocks” have ripped but so what? The bar was lower than an algo cable buried beneath the sea. The transports still look like crap and corporate spending, in anything, is printing lows.

The fiscal cliff in my opinion will get remedied, even the hack politicos aren’t that stupid. Romney or Obama? Market doesn’t care, as a matter of fact, if Romney  did win, and fires Bernanke, the greatest schoolyard drug dealer in modern times would be kicked to the curb. Bad for stocks.

Although Wall Street leans right, no one wants the printing party to end, and although the economy could get worse under Obama, the market isn’t the economy, and hedge fund managers prefer Ferraris to 5% unemployment.

The Mid East has hated since the Age of Pericles and that will never change, the headlines will stay the same on that front long after we’re all dead. As a result, crude will bounce from 85 to 150 in the big picture.

Europe peaked centuries  ago, and is now a broken distraction to us all. They are in a depression, so the only place to go from here is higher. They have started their first round of QE and I will only ask you to remember what happened to our markets when we launched our first round. I think The S&P doubled if I’m not mistaken.

Regarding our current rally, we will pause and go higher and pull backs will be shallow and buyable.

As the folks at McClellan write this weekend:

The uptrend should live on, at least for a while.  That’s the message from the NYSE data on the daily number of stocks making 52-week new highs (NH).

When an uptrend is about to end, it usually shows signs of tiring before actually turning down.  This can take the form of momentum divergences, weaker Advance-Decline numbers, and other signs of diminishing participation.  When the work of pushing the major indices to higher highs is being done by a smaller number of stocks, that is a good sign that the energy is waning.

We do not have such a sign yet, at least not from the daily NH data.  There was a peak at 495 back on Sep. 14, which was the same day that the SP500 reached its peak, and one day after the FOMC made waves in the markets by announcing QEinfinity.  Since then, the daily totals of NH have been lower, but so has the SP500.  In other words, it is a normal response to the small price correction, and not a sign of a weakening of the upward surges.

My Premium site has been killing this tape the last quarter, if you would like to see where we go from here in greater detail, or to request performance, email: [email protected]

Subscribe here


Previous Post
The Wrap 9/26/12
Next Post
Sad Links

Recent Articles