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(Reuters) - The Federal Reserve has moved closer to embarking on a new round of its controversial money-pumping after the central bank and its chairman Ben Bernanke highlighted a grim outlook for the U.S. economy.
Bernanke on Wednesday opened the door a bit wider for the Fed to return to buying securities in the months ahead to buttress a weak recovery and keep inflation from slipping too far below its newly adopted 2-percent target.
"It sounds like the finger is on the trigger," said Thomas Simons, a money market economist at Jefferies & Co.
The Fed's announcement that it was unlikely to raise interest rates until at least late 2014, more than a year beyond its previous guidance, immediately pushed down Treasury bond yields and Bernanke's comments to the media raised expectations of a further round of so-called quantitative easing, or QE3.
It remains to be seen if the potential political backlash proves too daunting.
The prospect of the Fed pumping yet more money into the U.S. economy was seized upon by Republican hopeful Newt Gingrich to slam President Barack Obama's record. That highlighted the political pitfalls for the Fed in an election year.
Barring an unexpected pick-up in inflation or the U.S. economy suddenly kicking into a higher gear, Bernanke said it was logical that the Fed should look at ways to do more to help.
"The framework makes very clear that we need to be thinking about ways to provide further stimulus if we don't get improvement in the pace of recovery and a normalization of inflation," he told a quarterly news conference.
"Probably the main take-away from the press conference is the sense conveyed by Bernanke that it would not take much of a disappointment in growth or inflation to get the Fed to start another round of QE," said Michael Feroli, chief U.S. economist at J.P. Morgan.
Regional Bank SPDR Forms Big Bearish Engulfing
With stocks opening strong and then moving sharply lower, the intraday bearish engulfing scan is filling up quite quickly. Of note, the Regional Bank SPDR (KRE) has a bearish engulfing in play on Thursday afternoon. In fact, notice how the ETF pretty much engulfed the last 11 days of trading and broke below its mid January low.
With stocks opening strong and then moving sharply lower, the intraday bearish engulfing scan is filling up quite quickly. Of note, the Regional Bank SPDR (KRE) has a bearish engulfing in play on Thursday afternoon. In fact, notice how the ETF pretty much engulfed the last 11 days of trading and broke below its mid January low.
13 comments:
Newt must be delusional as Hopey gets his marching orders from the Fed. It is not the other way around.
Last call for Benton Resources. All about the B-Train. Actually there is so little volume in the US it is hard to believe this junior keeps on chugging along, but it is at the top of my watch list again. PMs and miners having a good week. They need to keep this trend up until May.
Things are not looking good in the oil refining biz
Chevron Posts Biggest Profit Drop in Two Years on Refining
Latest news on Benton.
Benton Provides Update
Those 1-oz Gold Buffalos that were priced at $1,765 last week are now going for $1,840.
I have been in the camp which believes PM's will take another dip - similar to the year-end one - before heading into their springtime climb in price, however now I am not so sure.
However, as I did make two Silver purchases in Dec. and two more this month*, I don't feel like I completely missed the bus.
*more about yesterday's acquisition later.
Yes those buffalo's sit in the shelf as I was too preoccupied and afraid of healthcare bills.
having problems with my modem, have to return it and get another one
Benton was a great buy in the low 0.30s, as I indicated a couple weeks ago (with perfect 20/20 hindsight LOL), now up over 50% since the mid-Dec intra-day low 0f 0.25 (rallied to 0.395) and then early Jan low of 0.32, now at 0.45... may see one more dip as it is above the upper BB now, or you missed the boat on that one if 'RISK ON' continues...
GWG.V bottomed late Dec at 0.38 intra-day, then rallied to 0.58 in early Jan (over 50% gain), now correcting again but chart not looking too bad now... as I said, buying near 0.40 was a good time to enter....
No risk, no reward, when the chance comes along you have to pull the trigger. Charts supported those entries at those times, so we should have jumped in. I was too busy and not paying attention to GWG, so I did not buy any. But I am still holding 30K BTC entry 0.35 ACB from before, and will be till after the spinout goes through.
Seasonality does support a rally in the shiny metals into the Spring, and we have probably had the mid-winter correction recently.
But overall, they have to breakout to new highs, or this rally will be just another failure, on the way down in a larger H&S pattern completed at the earlier highs last Spring...
So flip a silver or gold coin there, while a good short term trade opportunity recently, may not be anything to get excited over longer term.
Those earlier highs are still a very big mountain to climb, and while possible, I would say breaking out to new highs is unlikely. Or maybe Zimbabwe Ben will announce a $10 Trillion QE3 and drive the US $ prices up there... but I give that low odds in an election year for political reasons.
The shiny metals have until about mid-May or so to prove or disprove my thesis, after that the odds of any further run up becomes increasingly lower, if seasonal patterns hold. Then it is down to the usual mid-August lows, the best time of the year to buy, statistically.
Since usual seasonal patterns have not been followed too closely the last couple years, they will probably be in force this year, if you calculate odds.
Trading is a game of probabilities, you select the 'most likely', based on the charts, seasonality, and with a nod to fundamentals (I would say using 80% charts, 20% other factors), and you roll the dice, and put a stop on. And if you get stopped out, so be it, no one can be right all the time, nothing to lose sleep over.
chicken little - thanks for your great comments as always, the one in the last thread was up to your usual high standard.
Have a great day all, off to work I go, Friday's we start early and get off at midnight on afternoon shift, no overtime ever on a Friday, which is a nice thing for weekend planning. OTOH I have to work the next 3 Saturdays in a row, but it is overtime at 1.5 usual rate, so I can't complain too much.
The economy may suck, but somewhere something is happening, as we are extremely busy at my work at least. Too bad most sectors can't say that.
so OT but informative.
Bought individual health insurance reading online BRIEF info (from agt). Got my card/BOOK today. I began reading. (I may not UNDERSTAND everything but I'm going to read it.) STOPPED AND CALLED COMPANY. It seems the $500 for diagnostics covers: BLOOD TESTS, X-RAYS, MRI/CAT SCANS, MAMMOGRAMS, CHEMO, etc.
After THEY pay $500 it is as if you have NO INSURANCE WHATSOEVER. And for this they were billing $392.14 per MONTH. That is with a $30 dr./specialist to boot.
Am now looking at buying new PLAN. This one would be 50/70 dr/specialist with $500 for first 5 days in hospital but lab work covered and deductible for other diagnostics in place. COST $836.88
Is it any wonder WHY people don't have medical insurance?
I will be paying down all our savings for insurance so when we're 70 or 80 (if we live that long) we'll have nothing. Big surprise!
The thing that irritates me is that this was a GOTCHA situation. The companies are playing 'gray areas' and the government is supporting that under 'affordable health care'. My big fat fanny :-)
Chicken Little, if our elected 'leaders' in Washington D.C. had to pay for their own health care - then they would fix this health care / insurance dilemna in NO time.
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