Watch The Dollar Mid-May 2012 Action For Quantitative Easing Clues:
U.S. equities rose today with the S&P 500 rising 20.77 points to 1,315.99 for a gain of 1.6 percent. Today was the best day for the NASDAQ percentage wise in 2012 as it gained 68.42 points up 2.46 percent to 2,847.
Traders snapped up stocks except for Facebook which gapped down and closed well below its IPO offer price of $38 dollars dipping 11 percent. The market was due for a bounce and we believed a short-term snapback would occur sometime this week because U.S. equities were extremely oversold in a bond “bubble”.
U.S. equities might be back in the red when investors re-focus on Europe but Asia provided some solace today as Wen Jiabao, China’s premier made statements that they will focus on “growth”.
Predictions of more liquidity in global markets have risen with each poor May 2012 weekly initial jobless claims report and we believe announcements about more easing may be forthcoming. We are watching the dollar to see if decreases or increases against major currencies will give clues to expectations of more easing.
The dollar gave back some ground today after an exceptional May 2012 rally and more QE3 will have an impact on the dollar. Short-term bearish sentiment may change depending on the likelihood QE3 is signaled next month.