Diary of a Financier

SPX Retracing All the QE Gains

In Economics on Thu 4 Aug 2011 at 15:37

Amazing. Just amazing. The market is talking to us.

1. SPX/Gold back to March 2009 low: The S&P 500 (SPX) priced in Gold (GC/) is back to the exact low of March 2009, when SPX bottomed at 666. If you consider that in simple terms, it means all the government stimulus didn’t rear any growth from the lowest lows of the Great Recession, to wit I have also noted Real GDP having not exceeded its 2007 high-water-mark…

SPX/Gold- S&P 500 priced in Gold. Ratio in March 2009 (0.74) same as today's ratio (0.75).

2. SPX approaching pre-QE2 levels: The launchpad for QE2’s 11/03/2010 takeoff was SPX 1200. The index is threatening to retrace all those gains, essentially saying that the liquidity did nothing for the economy or markets. We haven’t realized much economic growth–which is widely acknowledged–but now we lack even the wealth effect…

SPX- nearing pre-QE2 levels @ 1200

Next SPX support at 1200. 2nd support 1180.

–Romeo

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