In case you missed it, here’s a summary of the ETF topics and market reviews I posted to my blog during the week ending on 9/23/2012.
Market volatility slowed down after the Fed’s QEternal announcement last week, but the question in my mind is whether we’re topping here at these levels, as some technicians seem to indicate, or if it’s a base building process that will set the stage for further advances.
As previously mentioned, the fundamentals are simply not there to even justify current equity levels. Interestingly enough, the NY Fed seemed to concur after having released data about a week ago saying the S&P 500 would be meandering around the 600 level had it not been for the various stimulus attempts.
That’s quiet sobering and makes me wonder what the next step will be after QE-3 turns out to not do anything to improve unemployment. Obviously, buying some $40 billion of mortgage backed securities (MBS) per month will have a secondary effect on equities in that some of that created liquidity will find its way into the markets.
However, how long can that disparity of weak fundamentals and artificially propped up equity prices last? Sounds to me that a bubble is in the making, and the eventual bursting of it is pretty much a sure thing; however, that does not make it imminent. As always, the timing is the big unknown; this is why the use of my recommended sell stop discipline is crucial once the inevitable turnaround happens.
Over past week, we covered the following: