This week, 9/13 Fed announced QE3 $40b of MBS purchases a month until further improvement in Labor market condition is visible. So that's it, detractors have been shouting about the breakdown of the transfer mechanism or saying flat out that money printing doesn't do anything for the economy, while Keynesian think even this action is bit too small. I don't think QE has done much for the improvement in the labor situation, and I just dislike this kind of manipulation, not saying anything about the politics of it. Also, I'm getting a bit concerned about the way both ECB (Draghi's bazooka) and now the Fed have touted unlimited intervention. They're moving a lot of bad assets onto their balance sheet which only makes me worry about the banks going BK.
That said, it is the world we live in and we trade prices and let investors (missing in action so Fed then?) decide on the value. SPX broke a major resistance level this week. I'll start with the monthly chart: 5/31/08 high of 1440.24. If you look at the chart, that peak doesn't look too prominent in the scheme of things, the move down was huge, 1576.09 to 666.79. If you look at the chart since 1997 onwards, we've moved into the monthly ATR of 100pts, So breaking up to the peak of May 08 doesn't seem too far fetched, given that we've moved 76pts this month and we've had QE and a major resistance has been broken. On the other hand I would have been happy to have SPX turn lower into the lower price channel support from here. So the market must turn lower this week or it would confirm my upward target however incredulous it may seem.
Weekly chart below you can see that the move above was on good volume and the fact that we had a second day continuation only makes us believe that it might have legs, only time will tell. With that said, maybe first ever bullish view, I'm not positioning long here. Also, I think Friday's price action of giving up mornings gains, might be hope for the bears of a possible return to sense.
