I have one question for those that believe this rally was fueled by QE3.
QE3 was announced on September 13, 2012. The S&P proceeded to fall from 1436 on September 13 to 1343 on November 16th.
If QE drives the market up, then why did the market fall 6% in 2 months after QE3 was announced? The change happened in November when we started to get better employment numbers. A strong economy is good for the market. It is better for the market than QE.
This selloff is simply weak hands who are scared.
Sentiment: Strong Buy
The bottom line is people spend too much time watching Fast Money on CNBC. The idea that the stock market rally has been because of QE and that stocks fall when rates rise is completely untrue.
People can be forgiven for thinking this because normal markets haven't prevailed for the last two years because of Fed manipulation, but as markets return to normal we'll begin to see normal capital flows which means higher interest rates and higher stock prices.
Sentiment: Strong Sell
By the way, I just finished looking at a chart of 10 year Treasury Yields vs. the S&P 500. Historically, the S&P 500 and interest rates are highly correlated, meaning that as one goes up the other also goes up. This trend was in place up until 2011 when the two were decoupled.
If you care about facts, I urge you to check it out. From 2001 to 2003 interest rates and the S&P 500 both fell. From 2003 to 2007 interest rates and the S&P 500 both increased. From 2007 to 2009 both rates and the S&P 500 fell, then finally from 2009 to 2011 both rates and stocks increased. This worked until QE2 in 2011 when rates fell and stocks increased.
There is no doubt that there will be tremendous pain in the bond markets. Interest rates should be much higher than they currently are, but as the markets normalize stocks will not fall. A stronger economy means higher rates and higher stock prices.
Theol, I dare you to get in the way of the exodus of money coming from bonds to equities if the economy improves as everyone "fears". It will crush you and your short positions once the markets stabilize.
I put "fears" in quotes because people being scared of stronger economic growth is nearly the dumbest thing I have ever heard. If we don't get greater economic growth then we stay with the status quo of lots of QE which according to you is all that is keeping CSX stock high.
...i have no doubt. you are correct. worst part of it all is csx is sucking and is getting worse. the #$%$ i post is true based on earning reports, you must not read. i know people who's foremost income is derived from csx. and they are worried about their financial security...ok? it's not my fault...