QE2 did a rise between 2/3% in two days, after that a retrace for a month and then a 13% rally.
QE3 did an initial rise during the first two days after the announcement , then we are watching the adjustment and ….right now trying to know the most important support as a bottom line like BB did on November 2010 that may generate another… rally above 10% (13% would be too much repetition ...)
When fuqy Ben confirmed QE3, Mr Market was coming up from level 12,000 DJIA, but could not surpass the May toppy @ 13,338.
When happened QE2, Mr Market was coming up without exceeding level 12,250 (toppy during April 2010).
QE3 reached 13338-13655 (Ben announced on September 13, and September 14 reached a peak @ 13648, after several days without exceeding that level with strong resistance until September 21 when reached 13657 and 13661 on October 5. Two euphoric early days, then 20 days up and down and finally the current retrace we're seeing.
We had a nice QE3 support @ 13,250 at the beginning and now we’ve level 12971 during September 4 (equivalent to the 110 points retrace of November 29, 2010 when Mr Market turned around and began to climb for 3 months with a 13% rally).
In this case the DJIA support between 13040/12975. Both are equivalent to the 10922 bottom on 29 November 2010.
Toppy rally starting @ 12,970 then another 13% to 14,700 if BB repeat the pattern.
Three major supports for DJIA from 2011 bottom to June 2012 bottom too and for the moment remains bullish; this line also crosses through the 12,970 to coincide with a lesser wave degree who has support prior to the Ben QE3 announce.
The third element is the 200-day moving average on DJIA which should provide some additional support for the medium and long term in coming days/weeks.
Currently Mr Market has support @ 13,038 closing the gap on September 6 when the ECB announces they ‘ll be buying bonds from their troubled countries with the subsequent rally.
“MrSouthBrooklyn” thinks 13,038/12,970 are the DJIA key without taking into account some “help” from Sandy or AIG in these circumstances.
Think Mr. Market is willing to consolidate around 13000 and if we go below 12,970 something has changed and in that case no doubt the failure of the two major stimulus by fuqy Fed and fuqy ECB.
All these levels watching and having some coincidence with a rate between 1.65 /1.70.
For now supports are intact ... let Sandy talk that has proven to be much faster than any of our numbers.