Major rally underway–slowly going long

I reversed my positions and began going long.   It looks like the recent 3 day decline was a just a fake-out.   A lot of stocks are breaking out.   I must not marry a market scenario.   I must be nimble and go with a likely change in trend.   I am buying some QLD and will add to it if it rises.   I also bought some DDD and PCYC. No guarantees.   I will add slowly if a stock acts as predicted. Will this bounce last???

6 thoughts on “Major rally underway–slowly going long”

  1. I suspect this rally will be short lived and the highs of the year (reached in the early Spring) are already in. If no QE3 plans offered by the Fed this week, we’ll likely sell off quickly. I tend to expect this scenario. However, If the Fed hints they will start some form of QE3, then we could rally for a few weeks to test the highs of the year … which my guess would be they would fail there and we trend down until the end of the year.

  2. Why is there a perception that the Fed has to inject money supply into the economy for values to go up? Profits have been increasing since 2008 and you can’t in any good faith and knowledge say thats because of bond buying. Any form of QE3 would have an actual marginal effect, the size of QE programs have been decreasing at an exponential rate; economically, its not needed. It is indeed possible that values can slowly creep up instead of jump up. Seeing as how GDP from Q1 was way ahead of the prior year and Q2 was not that far behind, it lowers the bar that needs to be met by the later part of the year. Also, a side note, being “nimble”… as I understand, is reacting after the market has already moved, so whats the point?

  3. “Why is there a perception that the Fed has to inject money supply into the economy for values to go up? ”

    Because that is what has been moving the markets — The Fed and their large bank buddies have been putting a floor in the market when it gets into trouble (since 2008) via QE to give the perception to the public that there is a ‘recovery’. When in fact, their really isn’t. “Profits have been increasing …2008” — not really, when one evaluates them in terms of commodities such as Gold. corporate profits have been slowing the last quarter due to the worldwide economy slowing down. many companies have been guiding lower recently. If no QE3 (or other central bank easing), then Deflation takes over and pulls the market down with it. That actually would be the best thing to occur for the economy — all the malinvestment in the system needs to be cleaned out before real growth can occur. But I doubt the central banks will let that happen for too long … they’ll eventually flood the economy(ies) with paper money and devalue currencies to try to boost exports and to marginalize debts run up by an out of control Federal Government. And it will be the uninformed taxpayer left holding the bag.

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