Dangers: The Stock Market Hangs Hopes On Federal Reserve
The stock market is popping today ahead of the FOMC Policy Statement at 2:15pm ET. The market is hoping Ben Bernanke reassures the world that it is not ending and that the economy will survive without a major double dip recession. In addition, the markets are hoping for some sign of QE3. The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) is trading at $109.99, +1.92 (+1.78%), the SPDR S&P 500 ETF (NYSE:SPY) is trading at $114.00, +1.74 (+1.55%) and the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) is trading at $52.09, +1.50 (+2.97%).
The gains in the market today are on hope. The market is addicted to Federal Reserve intervention. This has the potential to create a crash like scenario should the markets not get what they want from Ben Bernanke today. If they do get the right mix of positive statements on the economy and QE3, a sharp short squeeze should follow, taking the markets even higher. This addiction to intervention in the long run will end badly but the markets are all about the short term.
The market has fallen over 15% in the last couple weeks. It is oversold but fear remains strong.