If these major markets can break above key Fibonacci resistance in the chart below, investors will most likely “drive prices” to a much higher level!
CLICK ON CHART TO ENLARGE
Where does “price life begin?” On breakouts!!!
Game plan…Will be a buyer with a stop on an upside breakout!
I do read Hussman. It seems to me that historically you could look at three QE episodes.
The first, during and just after WWII. The Fed targeted the long bond rate at 2.5%. I’m not sure how much they needed to actually buy, but it was the same idea. But this was a time of truely massive fiscal spending. Unemployment was essentially 0% by 1943.
The second is Japan over the last 10 years or so. This was period that also included large stimulus spending.
The third is the U.S. and U.K in 2008-9, a period where liquidity was a severe problem and also saw large stimulus pending.
We are likely to be in a period of contracting stimulus spending as the 2009 act winds down. And when QE seemed to work best in Japan, before 2007, rising exports provided a big boost to the economy. Here, imports are rising again and exports are flat.
My point is, there really is no historical data that’s particularly relevant.
If you want to look at actual historic patterns relevant to impacts associated with QE, look at Hussman’s weekly – there are some interesting graphs.
Bob_in_MA – in a nutshell, what you are describing is herding behavior. Might be profitable in the short-term, but history indicates it does not end well for long-term investors.
Well said! I knew some people with more than one marble could come up with something better!
We need to start a contest per what QE2 stands for!
I just read John Hussman’s weekly which focused on the effects of QE using historical data. Much different than most would expect. Hussmanfunds.com
Great assessment! This isn’t the effect of QE2, or even the anticipated effect of QE2, now it’s the anticipated effect of the market anticipating the effect….
I think the only sure bet is 90% of the prognosticators will be wrong.
Will you be updating these (and IYT) with recommended stops if they are actionable?
Could QE2 stand for…. “questioning everything twice” or “questioning everything (the) second” time? I know readers can do better than this though!
you mentioned “honest”….I honestly and humbly don’t know what is driving price, yet I am comfortable with going along for the ride!
I like this idea…if a chart is moving from the lower left hand corner (of the chart), upwards towards the upper right hand corner, I like to own it, without knowing exactly why the price action is doing what it is.
Chris…I guess we will soon see whether synthetic manipulation of markets by our government has the same effect on technical signals that honest, true economic strength does.