NEW YORK ( TheStreet) -- It's got to be difficult to be bearish on the stock market these days.
Not because there aren't some valid reasons to be careful with equities at their multi-year highs. The list of potential headwinds has to be pretty familiar by now -- the uncertainty created by the U.S. presidential election and looming fiscal cliff, expectations for ho-hum growth in corporate profits over the next few quarters, the lingering questions about just how Europe gets fixed exactly, China's slowing growth -- but none of it seems very compelling when put against the massive liquidity pledge put forth by the Federal Reserve last week.
Couple the European Central Bank's stated willingness to "do whatever it takes" with Ben Bernanke's vow to keep filling up the punch bowl even after the U.S. economy strengthens and going against the trend on stocks right now seems like pure folly. As Bank of America analyst Ethan Harris said Monday, the Fed announced more than just your average large-scale asset purchase program
"Many commentators are treating the Fed's new policy as just another quantitative easing--QE3," he wrote. "We disagree: we think this is QE3, QE4 and perhaps QE5 combined. We expect more than $2 trillion in asset buying over the next two years."Now that's a bazooka. Meantime, Sam Stovall, chief U.S. equity strategist at S&P Capital IQ, observed QE3 puts pressure the U.S. dollar and broke out which sectors are likely to most sensitive to swings in the greenback using historical data dating back over the last three years. He noted value of the dollar fell 1.75% last week and 2.9% since Aug. 31, huge moves in the currency markets. "Strength in the overall
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV