The sentiment in the investment world is on a sugar high over QE3. Retail traders are talking about sky high targets and broking houses are dishing out lofty year end targets. Now let us stop for a moment, jog our memory as to what effect QE2 had on equity markets around the world. Date of QE2 announcement: 3rd Nov 2010. And here is what happened in Nov 2010…
It wasn’t just Asian markets. The picture across the CIVETS markets was pretty similar.
This is not a complete list of equity indices that topped in Nov 2010 but I guess this is enough to drive the message.
Given that the new QE is not much different from earlier QE2 except for some small bells and whistles, should one expect a much different outcome now and turn bullish on the markets for the long term? What was that Einstein quote about insanity?
I’ll be watching the charts for reversal signals and be ready for a big punt if one comes through.