QE2 leaving southampton water.jpg

No Its NOT Either One

Quantitative Easing 2

What the hell is QE 2 and why is it so important to YOU?

Background – Back in 2008 our no rules economic capitalism (Some call it casino capitalism others the “free market”) brought us to the brink of disaster. Back in 2008 Investors411 stated the economic situation here was “far far far far far worse” than anyone expected.

There have been four major money dumps or solutions to prevent a Great Depression in the USA. Other countries have had their own money dumps.

  • TARP
  • Stimulus Plan
  • QE 1
  • QE 2

Simply put the Fed is again in the middle of another massive money dump or printing money. Between QE #1 & 2 we are talking trillions of dollars. The Fed has implied it will do whatever it takes to keep the economy afloat. So who knows how long the QE 2 will stay in effect.

What happens when you inject this cash is the dollar falls in value and in the future inflation becomes a problem. One example/impact is the globalized value of your home falls. Japan has already started to play the same game. Europe and Great Britain will probably follow. This is why people are buying gold because it sure looks like QE 2 to is going full speed ahead and is soon to be followed by other ships/countries

Will QE 2 work? Hindsight is wonderful and so far there has been NO second Great Depression.

The opaque US Financial Institutions that benefit from these funds have not been forced by congress to become transparent capital entities. (see past Investors411) So its impossible to venture a guess behind all the smoke and mirrors other than these shadow institutions have been given a mountain of money to fill the huge hole they dug.

What I can tell you is to watch the dollar’s fall. Its now at $77.44. Last year’s low was just above $74 and the 2008 low above $71. That’s the last two lines in the sand that everyone’s watching. A more lasting impact of all this printed money is inflation. Of course, the falling dollar has led to a rising stock market. Many think this is another bubble.

America’s strength has been the vibrancy of her democracy and capital markets. When democracy and capital markets become less transparent and money flows become hidden or restricted to an oligarchy or unbreakable monopoly then all America suffers.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary



Index Percentage Volume
Dow +0.05% down
NASDQ +o.02% down
S&P +0.01% down
Russell 2000 -0.01% -

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

US Stock Markets -

Yesterday’s semi holiday was like watching paint dry on for US indexes. Extremely light volume was typical of Columbus day and the fact that many investors have left the stock market over the year

There are lots of other technical indicators out there besides the one Investors411 focuses on (The MO) that show markets are overbought.

The benchmark S&P 500 is about 5% from yearly high and many emerging markets that have lead this rally are at new highs.

Repeat from yesterday – Fundamental Outlook on Wall Street“The concept of a double-dip recession has been replaced with slow and steady improvement, and even if we don’t get it, we have a Federal Reserve that’s ready to step in and support the rally,”said Art Hogan, chief market analyst at Jeffery’s.

Earnings season gets its first major report  after today’s close as tech giant INTC (Intel Computer) announces.  How the market digests this news is often a decent forecasting tool for the next few weeks.

Significant Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar rose +0.34%  yesterday. Yesterday’s action slightly bearish for stocks but overall trend of falling dollar trend is = Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a smidge -0.04% yesterday An 8 week bull run, then a two week fall. A week long rally flattens out.  = Bullish/Neutral
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] Fell slightly to to +18.62. Still lots of room to move higher or lower. Location= NEUTRAL

Reading Tea Leaves

Earnings Season has the juice to alter the bulls stampede. We’ll have to wait to see what’s in INTC’s reports and how Wall Street reacts to have a better picture.

Otherwise the same bullish pattern dominates.


The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions)

  • EWS (Singapore)
  • USO (price of oil/commodity).
  • SSO (2x what S&P does)

Check out Paul R’s always enlightening updates on individual stocks and sectors in the comments sections.

Longer Term Outlook - CAUTIOUSLY BULLISH


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