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The stock markets have crumbled after every quantitative easing program. In 2010, the stock market plummeted lower after QE-1. That stock market decline lead to the famous Jackson Hole announcement that the central bank would implement another round of quantitative easing called QE-2. The one year anniversary of the last QE-2 announcement is coming upon us later this month. Will the Federal Reserve announce another stimulus program at the next Jackson Hole, Wyoming event? Many traders and investors believe that it is these stimulus programs (quantitative easing) that have actually lead to these declines in the stock market.
The stock market now depends on stimulus from artificial interest rates in order to inflate and trade higher. This is very obvious, simply look at all of the recessions that we have had over the past 10 years and you will see that easy money has been the quick fix to every problem. In other words, a weak dollar policy is the cure that the central banks prescribe. When the powers that be continually keep the U.S. Dollar weak it causes inflation in the world and actually taxes the U.S. consumer. All the goods that the U.S. consumer purchases becomes more expensive. People on fixed incomes especially feel the negative effects of the weaker U.S. Dollar Index.
Albert Einstein used to say that insanity is doing the same thing over and over expecting a different result. Well, it is now time to realize that the Federal Reserve and our elected officials may simply be insane. As far as we can see they continue to just do the same mistakes over and over. These same officials even put into power the same people that caused the problem in the first place. Oh well, what can we do? This is simply how the world functions when the Fed does not have a plan.
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Having studied more than 1,000 stories by these journalists, I can assure the reader that nearly every one of them was sourced from a tight network of hedge fund managers, and that a great many of the stories were false or misleading. Moreover, most of the people in this network (including Jim Cramer himself) are tied in important ways to two famous criminals from the 1980s – Ivan Boesky and “junk bond king” Michael Milken.
http://www.deepcapture.com/email-exposes-short-seller-plot-to-destroy-a-public-company/
Let’s start with S.& P.’s lack of credibility. If there’s a single word that best describes the rating agency’s decision to downgrade America, it’s chutzpah — traditionally defined by the example of the young man who kills his parents, then pleads for mercy because he’s an orphan.
http://www.nytimes.com/2011/08/08/opinion/credibility-chutzpah-and-debt.html?_r=2
The downside today came on the back of a downgrade to the credit rating of the United States. The S&P downgraded the U.S. credit rating from AAA to AA+. Europe continues to be a mess while the ECB (European Central Bank) said it would start buying Italian and Spanish bonds to push down interest rates.
Key stocks are beginning to look very attractive. Amazon.com, Inc. (NASDAQ:AMZN) a master trend line support point at $193.00. Since then it has bounced sharply intra-day. Caterpillar Inc. (NYSE:CAT) and Ford Motor Company (NYSE:F) are also all at master support levels on the daily charts.
The key is to find a stock that is into major support and match it up to the S&P completion of the head and shoulders pattern. This gives it a higher percentage chance of success. Essentially, buy a position on support with a bounce in the market like the wind in your sails. To get more amazing, hardcore analysis, take the seven day free trial to the Research Center. Join the best service for investors, traders and hedge funds. Join the pros to profit with the pros.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com