September 2012 Rally Turns Rangebound As Traders Look For New Opportunities and The Possibility Of QE4?
Stocks fell slightly today on no major news as traders look for new support levels after the Fed promised to inject more stimulus into the U.S economy. The S&P 500 traded in a tight range today as traders look for more opportunities to get in on the rally that is causing some money managers to chase performance.
Some shorts are explicitly fighting the Fed and don’t realize that if stocks turn in a major way and don’t correct naturally- the Fed is willing to do a QE4. We’re definitely the first website to claim a QE 4 program is possible but we strongly believe that if asset prices decline sharply- the Fed could make the 40 billion in bond buying each month – 100 billion- unlimited and non- sterile if necessary. Traders shorting this month need the market to fall by 5 percent before they break even..we will wait until it becomes more obvious but the those shirting for 2 months need the market to fall by 8 percent on average to break even- don’t follow their losing strategy. It rarely pays to be the first one shorting U.S. stocks- and long term it’s a net loser. Look for buying opportunities because right now some managers are explaining to clients why they made less than 25 percent this year like the XLF did.