Wednesday, August 22, 2012
Bill Gross Handicaps QE3 at 80% as the Fed Hints at a new Money Printing Operation
All eyes were on the FOMC meeting minutes today! Our attention was on the price action, but market pundits were looking for the FOMC to hint at further stimulus from the central bank. Bill Gross tweeted shortly after the release of the minutes there is now an 80% chance we get a new money printing program. In the minutes, the FOMC noted the economy would need to improve for them NOT to act. More importantly the market reacted to the news initially moving higher. While the market did close off the lows of the session the market didn’t explode higher. We remain in an uptrend, but we still want to be aware of further distribution and act accordingly. Gold and silver moved higher on the news of the FOMC acting once again. Both precious metals have been relatively quiet for most of the summer despite stocks moving higher on FOMC hopes. At the moment GLD and SLV are in uptrends and look to be moving higher. All we care about is that they are moving higher and we have plotted our exit. We are still going to keep an eye for this market to take out yesterday’s high. Tuesday’s distribution day also is acting as a stall day. Stall days are high volume reversals when an uptrend hits a new high. In order to negate the stall day like we saw last week the market will need to take out the high on volume. Last Thursday we did see the market overcome a stall day and is a bullish signal. It will be important to this uptrend if we are able to repeat last week’s success. Any pile up of distribution here will not be a good sign for the uptrend. Know your exits and when the market signals your exit GET OUT. An unfortunate side effect of money printing operations is inflation. The way the government calculates CPI is a unique way of hiding true inflation. Gasoline and food prices are the most important to every American. Rising gas and food costs are a HUGE tax on the poor and lower/middle class families. It’ll be interesting to see the fall out if QE3 does come along. Remember to always cut your losses!