Expect stocks and commodities to rally – especially gold.
The S&P 500 followed through above 1440, confirming the primary advance to 1560*.
* Target calculation: 1420 + ( 1420 – 1280 ) = 1560
Spot gold broke through short-term resistance at 175, headed for a test of $1800/ounce*.
* Target calculation: 1650 + ( 1650 – 1500 ) = 1800
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.
Colin – interested to read your views on whether this is a semi political thing or The Fed actually think this will work…
Wasn’t QE1 1.5 trillion, QE2 600bn — what is 40bn per month going to do unless it goes on for years, which surely can’t be the plan. Surely if it doesnt work within a few months they will pull the plug and go back to the drawing board?
Though he would deny it, I suspect Ben’s strategy is to prime the pump ahead of the election: boost the stock market by lifting inflation fears. The negative effect of higher commodity prices and inflation will only be felt after the election. The immediate impact is on inflation expectations: lifting stocks and commodities, while weakening the dollar. Adding $40 billion a month to the money supply — and aggregate demand — is not ‘shock and awe’ but will have an effect if pursued over the longer term ($480 bn/year).