Here's what happened the rest of the year:
How about last year? Here is that week:
What happened after that? This:
And 2010? Again, this:
And what happened after that? Again, more of this:
I'm not pointing this out to heighten your complacency, by all means be vigilant. But I just thought I'd head off the "world is coming to an end" posts, tweets, and T.V. spots. This is no huge data set, but there is no huge data set that took place in this type of Fed policy environment, so, this is it.
Today was an ugly day and should be taken seriously, but only in context. And that context is the last week of September.
Philly Fed pres. Charles Plosser made some comments today of which this was one:
"We are unlikely to see much benefit to growth or employment from further asset purchases"
And he was right... But what will spur growth and employment is the bump in housing. The Case-Shiller S&P Home Price indices said today that average home prices rose by 1.5% in July...
That's July traders. Two months before QE3. As I pointed out in another post, the Fed is not trying to directly induce growth and employment. It's trying to indirectly induce growth and employment. It's doing this by saying to people on the side line "you will lose money to inflation and opportunity costs (low prices now, to higher prices later) if you don't use your money now." Will it work? I don't know. What I do know is that housing is coming off the bottom and that tells me people are ready to spend on homes. it also says that people who have been waiting for lower home prices may well have been waiting for nothing. They may realize this and start buying now fearful of rising prices.
This doesn't automatically have to happen but judging from recent housing data it already has. This is without any stimulus from government mind you (besides the record low interest rates, but I mean no direct financial help purchasing a home). This is just people seeing now as a good time to buy a home. QE3 I think will give a boost to this activity. as well as keep interest rates low allowing it to continue.
Housing effects a wide range of employment. Everything from the furniture store to the moving company, to the hardware store. So, no, Fed money won't directly effect econ growth or employment, but indirectly it has already, and it will continue. Whether the feds policies are right or wrong is for another post. This post is to say buy the dips! Buy the pullbacks to the 50 day's and 10 weeks, and base breakouts you missed earlier traders. because once people realize that it's Christmas time again it will be too late. You already see tucked away bottom of the screen headlines of temp hiring for the Xmas season, time is of the essence...
Good luck traders! And happy hunting!!