Who Moved My Punchbowl

After two back to back 90% updays (a rare occurrence), Russell 2000 at all-time high, S&P up over 60 points in 2 days, it was time for a pause; a pause that may be attributed to latest FOMC minutes.

Various members stressed the importance of a continuing assessment of labor market developments and reviews of the program’s efficacy and costs at upcoming FOMC meetings. In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.

In my humble opinion, the interesting thing here was “several” and “2013”. It seems that there is some sort of discomfort starting to emerge and an end date to QE-Infinity is being envisioned.

It is too early to conclude anything. But S&P 500 (SPX) and especially Russell 2000 (RUT) price action, together with bond yields will show what market participants are expecting (or sniffing). Don’t jump to any conclusions yet. One of my key learning– “I will dance to the tunes Uncle Ben is playing, but I will be dancing closer to the door.”

I will try my best to let my readers know when I start seeing smokes. Stay in touch.

Profitable Trading, OP

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