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Sunday, January 8, 2012

What does no QE3 means to US stock market ? IPCM, QCOR, INHX, VRUS, RFMD, DRRX

Fed has been keeping the stock market inflated by printing free money using QE1, QE2 and then Operation Twist. After a strong job report news, the chance of QE3 is over for 3-4 month and so the stock market dropped. Here is the chart that shows, how FED has kept the market inflated.

QE1, QE2 and Operation Twist effect on Dow
If you see, as soon as QE1 and QE2 was over, Dow dropped and came to reality. This chart is self explanatory. I still think Dow is falling below 11k, and S&P500 below 1100 if there is no QE3.

Eur/Usd dropping suggest market is now expecting some kind of easing from ECB. Eur/Usd is likely to fall at 1.25 on France downgrade of AAA rating.

Technical level in Dow to watch is 12285 for downside rally, and 12387 on upside rally. For S&P 500, 1275 is big resistance for downside, 1285 for upside rally. Once the resistance is broken it needs to stay below the level at the close to test the next level.

Economic calendar to watch:
3 EST Consumer credit: 7.6 Billion is expected, higher is bearish, lower is bullish.

Stocks likely to open low are: IPCM (-15%), LULU, SLM
Stocks likely to open high are : QCOR, INHX, VRUS
Earning before market open: AYI, AUGT, PENX, ZEP
Earning after market close: AA, SMSC,

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