Stocks Retreat To Pre Bernanke QE3 Comments Made Monday March 26, 2012: Durable Goods Orders Up:
Stocks fell precipitously in early trading today below the gap up caused by Ben Bernanke’s QE3 comments earlier this week. The selling may be related to the end of the quarter and traders taking advantage of the rise in technology for the last three months of about 22 percent. The lack of follow through this week so far doesn’t mean there are negative changes in fundamentals, durable goods orders were up and the recent spate of economic news has remained mixed positive.
The Commerce Department said today that orders for durable goods, rose 2.2% in February. Orders for items expected to last at least three years such as machinery, computers, autos and aircraft helped the durable goods orders report today. Durable goods orders were lower than some economists expected but the numbers suggest the economy is still in recovery mode.
Today traders seemed more interested in some profit taking and expect prices to level off as the new quarter starts. Gold and commodities have fallen to pre Bernanke QE3 comments and the current sentiment may be problematic if stocks fall far below pre gap levels established earlier this week. Our outlook for the next few weeks is still bullish but we are monitoring volatility and volume carefully. A turnaround in tech would suggest profit taking short term may be over and we believe the S&P 500 could reach multi-year highs in the next few weeks. Investors may need more clarity of whether quantitative easing will occur before placing large bets. QE3 would be considered insurance against a re-slumping economy which might be necessary after the worst recession since the Great Depression.