Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

QE Tapering - Ben Bernanke Plays It Perfectly.......

Stock-Markets / Stock Markets 2013 Dec 19, 2013 - 09:24 AM GMT

By: Jack_Steiman


The uncertainty of what big bad Ben would do was put behind us at 2:00 PM Eastern Time today. He played his cards perfectly. Think about it. It was time to taper, but would he was the real question. It wouldn't be good for his legacy to have a new Fed come in and be the one to have to do the dirty deed of unwinding the liquidity fix. It made sense for him to go out with a small tapering program in place. Not too much, but something.

To do nothing when things are getting better wouldn't be a good thing to do. It would send up a red flag that things are only getting better as long as he's pumping. That may be true, but he couldn't leave that message with Wall Street. When Yellen comes in she can now continue the process of unwinding without being made to look like the bad girl. Mr. Bernanke did a 10-billion per-month taper by taking 5 billion out of mortgage backed securities and 5 billion from treasuries. This number will be going up slowly, but gradually over the next year or two. He played a perfect game today and the market loved it. More on that coming up.

Two o'clock. Stomachs are nervous. Some selling ahead of the announcement. The market starts tanking lower on the simple announcement of tapering. We hear it's only ten billion. Nothing dramatic. Markets not that happy. But wait, now the markets exploding. Why? Simple! He told the world that rates will remain unbelievably low for years to come. Yes, years. Not months. Years! Low rates stimulates, stimulates, and stimulates some more, so even though liquidity will come out over time, there will be enough stimulus from lower rates to keep the economy humming along for quite a long time.

Housing will do well. Banks will lend. Folks will open businesses, etc. That was the magic for this market. Prolonged low rates. Nothing could be better for the banks, and just about everything else, which is why the market exploded today. The Dow was up a hair below three hundred points. Lots of new highs. The S&P 500 was three points from a new high. Solid, strong action with solid volume behind price. A bullish day in the face of sentiment. More on that in a bit. Bottom line was today was bullish within a big picture bull market.

Sentiment is still very bad news for this market. That should not be ignored, but as usual, you stay with the bigger picture trend in place, especially now that we know the Fed will be behind this market for years to come thanks to rates. The bull-bear spread amazingly did not pull back even though the market was down four out of five days last week. The spread remains 43.9% and that won't last. Someday it'll go into the 20's, but maybe the market needs to have a blow off top first, and who knows from what levels. The bears could not succeed in taking out those 50-day exponential-moving averages, and that is the bottom line.

Those who front ran by shorting are paying the price. Never do that. We've talked about it over and over. See it and respond. For now the bigger picture remains very bullish, but at any time a strong correction could begin due to sentiment. Staying long is the only way for now, however.



Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Sign up for a Free 15-Day Trial to!

© 2013

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in