QE 2 Launches

I suspected the release of the FOMC minutes might have an effect on the market, and it looks like i was right. The market was doing a whole lot of nthing until the release of the minutes, which was good for about 5 points on the SPX. Bernanke has decided that stock price will go up, no matter the cost to the dollar, and by God, that is what will happen. that is, until we get to 1180. Then I wouldn't be willing to bet on them going any higher.

 The market has already figured out QE 2, so it is no longer a surprise. Today's volume might just represent the last of the holdouts, those who weren't convinced but now have no doubts. Unfortunately, when the last holdouts are buying, that usually means a top is near, and I suspect it is. Right around 2400 is my target on the Nasdaq, and we are almost there.

 The Russell 2000 is furiously trying to play catch up, so my target here around 700 may be a little conserative, but there isn't much here to convince me this move will continue much longer. What I don't know is whether the movedown will be a set up for a blast up, or if we collapse into a quivering heap in a new bear market. In out new centrally planned economy, only the Fed knows for sure.

The most obvious beneficiary of QE will be gold, although it has already been priced in here, and we are in a so far short pause. ATR is rising, meaning volatility is rising, so the straight up move probably will not continue, but we are still well above the short term trend line. 1377 is the target I have calculated here, and with basically no resistance, I would be surprised if we don;t hit it at some point.

The other beneficiary will be crude oil, which is very dollar sensitive, although it also has a supply-demand component that is much stronger than gold's. This is consolidating just below resistance, working off slightly overbought conditions, and sure looks like it is getting ready for a breakout. $100 oil is a sure sign of recovery, right, Ben?

if you have been following the foreclosure fraud mess, it is becoming quite apparent that it is on the verge of spinning out of control. Expect the government to step in a fix it, and also expect the fix to not work. Our increasingly encroaching federal government seems determined to force their version of "recovery" on us. It's just a matter of time before the markets revolt.

I will have the new highs update shortly.