The Quantitative Easing taps are still gushing today. The Fed has chosen not to cut back on its money-printing and bond-buying yet, which is clearly positive in the near term for equities. With so-called “tapering” now put off until another day, traders are free to focus on the market’s healthy momentum once more, as well as on improving fundamental data. I had expected the markets to rally even if tapering began, so I am now especially bullish. The indices could do with a bit of a retreat for now, just to unwind the intraday overboughtness. I’d then buy the subsequent recovery.
My outlook was pretty much right across the board yesterday, with the exception of gold. I was totally caught out by the move higher, which was obviously spurred by the prospect of further monetary largesse. One man who was correctly positioned in the yellow metal was Richard Jennings, manager of the Titan spread betting funds, who wrote to me overnight to say “I'm afraid we diverge on our views again - gold is getting primed for a real upswing again over the next 36 hrs.” I’ll wait for formal confirmation of a turn before switching my views, however.
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