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How Will Equities React When QE Liquidity Hits This Week?


While the market remains in a dangerous position, the Fed joins the game on November 14.


Of further encouragement to equities bulls, the Dow Jones Industrials Bullish Percent Index (BPINDU) is very close to forming a bullish MACD crossover from an oversold position, though this cross hasn't quite happened yet.

Click to enlarge

So there are some signs that bulls could find support here, but I would like to reiterate that this is a dangerous market for the inexperienced, and it's easy to fall into the trap of buying "the whole way down." Accordingly, the chart below outlines the bearish potential of this wave structure, and should serve as a warning to the over-eager. While an oversold rally could begin at the drop of a hat, it's simply not clear which direction the market will head from here, and the intermediate trend still remains down.

Click to enlarge
No positions in stocks mentioned.
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