Beware of the QE trade

Each day we hear more speculation that the next round of QE is coming from the Federal Reserve. We have already seen recession take hold in Europe, the UK, and Japan. We see no reason why North America is not going to follow this global trend down.

If the Fed does announce more QE understand that QE will not halt the recession underway; it will not renew consumer demand; it will not new create jobs. Sure another round of QE will likely cause another manic phase in the stock markets, but it will be even more fleeting than the other manic phases from QE injections.

If you are playing this QE trade make sure that you have sell stops in place. We see the next level of support for the S&P 500 at $1250.