This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Stocks Go Cliff Hanging Anticipating QE4

NEW YORK ( TheStreet) -- Stocks are hanging on to the fiscal cliff as investors and traders buy stocks in anticipation of the announcement of quantitative easing four when the FOMC meeting ends today.

QE4 is expected to be additional purchases of longer-dated U.S. Treasuries in yet another expansion of the Federal Reserve balance sheet, not an extension of operation twist.

I covered the announcement of QE3 on Sept. 14 with Bernanke Does the Expected and Then Some . I then noted that the major equity averages were overbought technically, and that stocks were overvalued fundamentally. I viewed the stock market as speculative.

Fast forward to Nov. 16 when I wrote, Go Over the Cliff? May Be Best Thing Then on Nov. 19, I wrote, Stocks Set to Bungee from Fiscal Cliff where I correctly called for the beginning a Santa Claus rally.

After QE3 was announced Sept. 13, the S&P 500 peaked at 1474.51 on Sept. 14. The Nasdaq continued higher to a peak at 3196.93 on Sept. 21. The Dow Industrial Average did not peak until Oct. 5 at 13,661.87.

Stocks declined from these dates into Nov. 16 as the focus shifted from QE3 to the risk that Congress and the president will allow the U.S. economy to fall off the fiscal cliff. Stocks turned on a dime on Nov. 16 on the prospects that House Republicans and the president would be able to forge a compromise.

Since then stocks have bungeed higher despite the continued cliff hanging stalemate, as the focus shifted to prospect that the FOMC will announce QE4 today. After the markets complete their reaction to QE4, the focus will shift back to the cliff. It appears to me that stocks may have set reaction high on Tuesday ending the first bungee rebound from the Nov. 16 lows.

It appears that both sides of the aisle can benefit politically by allowing the economy to fall off the fiscal cliff.

President Obama will get his way on raising taxes on those making more than $250,000. After the dive off the cliff his focus will be on re-instating the lower tax rates retroactively for the middle class. To get there he will have to agree on maintaining at least the equivalent in savings on the spending side.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • 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 Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs