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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.


Interesting to note the still-neutral position of the Dow Jones Transportation Average (INDEXDJX:DJT) (seen below), which continues meandering about within a large triangle. This further underscores the fact that the broad market is still undecided. It does seem to have clearly defined the triangle boundaries now, so is likely to run with the next breakout.

Click to enlarge

In conclusion, I feel part of my job is to note potential turn zones, and the market has reached one. That being said, the intermediate trend is down, so this is by no means an "all clear" for bulls -- it's simply a zone where a reversal of trend is possible. With that in mind, the central bank liquidity pumps are due to start flowing this week. So while many traders are quite bearish, I'm not completely sold on the bearish outcome yet. But I'll let the market dictate its plans -- I am remaining quite cognizant of the fact that if support fails here, the market could easily experience a panic sell-off. Trade safe.

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No positions in stocks mentioned.
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