ZH writes: "In other words, if Bernanke wants to juice the stock market, then he must do something to surprise the market. 'Operation Twist' is already baked in, which means he has to do that and a lot more to generate the positive surprise he clearly desires (this is exactly what he did on August 9th with the mid-2013 on- hold commitment). It seems that Bernanke, if he wants the market to rally, is going to have to come out with a surprise next Wednesday." In other words, stocks are now pricing in not just OT 2, and a reduction in the IOER, but also an LSAP of a few hundred billion. There is, however, naturally a flipside, to Bernanke's priced in announcement: "If he doesn't, then expect a big selloff." In everything, mind you, stocks, bonds, and certainly precious metals. And, of course, vice versa."
How big is the risk for (paper) PM next wednesday? Should we go cash tuesday? Or will we then miss the next surge up?
The other option is business as usual because the hedgies have seen it all at this point and it's as anticlimactic as the most recent Jackson Hole. The Fed loves teasing and kicking the can, why not milk it more?
I'm betting the SPX rallies all the way up to the 200MA by Wed with the continued bake-in...which will be 8-9 days in the green and overbought in the near term. The shorts will be covered by then. Soon after, the algo's get switched off, the POSX rallies to 80+ and the death spiral continues down to 1000 at least. The Eurozone is blamed once again, the VIX shoots up past 50 and the panic ensues.
Of course, I could be 180* out of the trade, but then what's the fun of gambling?
Bernanke's ability to thread the needle with his Jackon Hole speech absolutely astounded me. I believed that no QE announcement would result in a sell-off (stock markets), or conversely, a QE announcement would result in stocks racing while the dollar sold off and gold and silver rose.
We got neither. Bernanke managed to say nothing, while leaving everyone to believe whatever they were already inclined to believe anyway.
I don't think he can do it again, but hey, I didn't think he could do it last time either.
Something is brewing and I think it's going to be big...something designed to make what the PTB already want to do appear to be the only logical choice in extremis.
Nothing but cash and cold metal for me on Tues...
Right now I like the saying "There's always another bus." The key is to make sure you have enough money to buy a ticket...whichever bus you catch.