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Thursday, March 31, 2011

The Fed's gameplan

I look at the charts, and I notice 3 things:

  1. Commodities look like they want to correct
  2. The correction that began on February 22 til March 16, 2011 is not a significant correction
  3. Despite weak market internals, the market continues to advance and a breakout above the February highs would not be surprising although if it does, look for a major pullback
So now what? The Fed has been criticized for "propping up these markets" via QE-2 and causing inflation. But we know this is what the Fed wants to do. They wouldn't want it any other way.

But if there is outcry over money printing, how will the Fed continue to push its agenda? Easy. Suspend QE-2, let the propped up market drop, let blood spill on the Street, let deflation creep in causing a correction in commodities, and when the world looks like it's about to end, Bernanke will come forward and say, "I told you we needed to print more money....bastards." Everybody will agree and rejoice together. The correction in commodities will come to an end and commodities will sky rocket.

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