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The Bernanke Put
09 Apr 2012 EDT - CNBC.com
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The Bernanke put: Last week, stocks sold off on concerns the Federal Reserve was in no hurry to implement a third round of quantitative easing (QE3) or, possibly, extend “Operation Twist.” Today, stocks will be sold at the open because...job growth is weaker than expected...and QE3 is more likely?

The answer, of course, is that two different sets of trades are at work: In the first, those who trade the Bernanke put , in the second, those who have been buying into slow but steady growth.

If the Bernanke put is still active, stocks should hit their lows early this morning, and then move up.

Is this really a fall off a cliff, or a buying opportunity? The January and February job numbers might have borrowed from March, and the concern is that this may be the case with other data, like retail. Does this mean that the 11 percent gain in the S&P 500 index has also borrowed from the future?

It’s possible. So if you have a pullback, will it be a mild, five percent pullback, or something worse, in excess of 10 percent? A 10 percent drop would wipe all of the year's gains.

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