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Tuesday, June 19, 2012

QE1, QE2 and Operation Twist didn't work. So why extend it ?

Market is going into tomorrow with expectation of QE3 or extension of Operation twist, but neither of QE1, QE2 or Operation Twist has helped common people nor improved job market. Interest rate are already at all time low but it's not reaching to  majority of the people. Companies and Banks are interested in showing profit to investor and don't mind laying off peoples. Market is just 4% away from its 2012 high. Adding QE3 will increase inflation and increase the Gas prices at the pump. So the chances of QE3 is not there. Extending operation twist will only increase fed balance sheet nothing else, so why extend it. At the same time Fed will be in pressure to keep 401k in good shape ahead of election. Contagion from Europe is still  exist and any day Spain or Greece can take this market down. So Fed won't take any action at this time and it may want to hold it ammunition till something terribly goes wrong.
stocks for no qe3 and qe3
Whether Fed take any action or not just be prepared to take advantage of it. I am bearish for Gold and Silver tomorrow unless Fed prints money. To read more  what no QE3 means to this market check this

Trading Strategies For June 20th:
Based on the chart tomorrow, market should open low and rest of the days depends on Fed announcement at 12.30 EST and 2.15 pm EST speech of Fed chairman.
For Bullish sentiment to continue: Dow needs to break 12865 while S&P500 needs to break 1359. 
For Bearish sentiment to continue:  Dow needs to break 12784 while S&P500 needs to break 1348

In the chart below Red circle represent Bearish sentiment, Blue Circle represent Bullish sentiment.

June 19th - Dow closed in bearish zone and expected to open  lower tomorrow.

Dow chart for June.

In Forex Currency trading, Eur/Usd is at 1.267 (-0.11%), Usd/Cad is at 1.0184 (+0.09%) and Aud/Usd is at 1.0118 (-0.08%).  US dollar Currency Index is at 81.44 (+0.08%)

CBOE Volatility Index VIX up 0.33% at 18.38

GOLD is at 1621 (-1.50)

SILVER is at 28.455 (+0.087)

Earning Before Market open: ATU, CRWS, GR,  JKS, GAGA

Earnings After market Close:APOG, BBBY, CLC, MU, RHT, SONC, SCS

After hours big gainer: IDIX, MITL, GEVO, SONS, MDCI, ARQL, LZB, CHH, ATU, JBL

After hours big loser: FSII, ADBE, FFKT, KLIC, APEI, COCO, LQDT, CIM, SHO, GGB.


Stocks for Option Trading: CAT, XOM, SPY, QQQ, IBM, PCLN, AAPl, WLT, PCX, GOOG, MT.
Upcoming FDA approval  : ONXX and LGND on June 20th.


12:30 pmFOMC announcement0%-0.25%0%-0.25%
2:15 pmBernanke press conference----

Other Event to watch out

9:30 a.m.: Hearing to examine the IPO process, and its impact on ordinary investors, at the Senate Banking subcommittee on Securities, Insurance and Investment.

1:30 p.m.: Hearing on mortgage disclosures, and how to cut the red tape for consumers and small businesses, at the House Financial Services subcommittee on Insurance, Housing and Community Opportunity.

Forex Currency event:

1.    GBP- U.K. Jobless Claims and Unemployment Rate, the main gauges of labor market conditions measuring first-time claims for unemployment benefits and unemployment rate, Wed., Jun. 20, 4:30 am, ET.  

Following last month’s better than expected drop in unemployment claims, the report is forecast to deliver a smaller decline by 3,100 in May compared with 13,700 in April, while the unemployment rate remains unchanged at 8.2%. 

2.    USD- U.S. FOMC Monetary Policy Announcement, Wed., Jun. 20, 12:30 pm, ET.  

With the European Central Bank, the Bank of England, the Bank of Japan and other major central banks sitting on the sidelines despite of the political pressure, and the Fed Chairman not in a hurry to give any hints of QE3 during his testimony in front of the Joint Economic Committee in Washington, DC, it looks like the world’s central banks are in a "wait and see" mode when it comes to further easing. As Spain has now received an approval for up to 100 billion euro bailout of its troubled banks and with the Greek election outcome unlikely to push the country out of the euro-zone, the Fed might not feel that current conditions warrant additional monetary policy easing. This, of course, does not mean that QE3 is completely out of the picture. The Fed will be ready to deploy it if U.S. economic conditions deteriorate or if the EU debt crisis escalates.   

3.     NZD- New Zealand GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Jun. 20, 6:45 pm, ET.  

After expanding by 0.3% q/q in Q4 2011, the New Zealand economy is forecast to grow by 0.4% q/q in the first quarter of 2012. 

Wait till Wednesday FOMC meeting is over and then take appropriate steps.

1 comment:

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Nice post, things explained in details. Thank You.

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