Tuesday, May 21, 2013

SPY May 21 2013

Today was a quiet day in the market as traders continue with their case of the nerves as seemingly every Fed President running loose in the wild is getting his two cents in about what is going on with QE. We already know, of course, because Chairman Bernanke has told us - they are continuing QE but may adjust the amount up or down as conditions warrant. The market is like a spoiled child right now that needs reassurance on this every week or two. Tomorrow morning, we get the usual reassurance from Bernanke.

So, you no doubt are wondering, what happens if, instead, Bernanke decides to spank our complacent butts and says something like, "I think we've had enough QE. In fact, I'm going to put on a hair shirt and join a Monastery." Well, we sell off. Very simple and clean. I imagine we would lose 75-100 points on the SPY within a few days. I'm sure that Bernanke knows this would happen, too. I doubt he really wants that to happen. So they will be subtle and mysterious about QE until, one day, they say, "Oh, by the way, QE ended three months ago." The market might hiccup, and then laugh.

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