SPX Weekly Chart Showing Quantitative Easing (QE) Rallies Since the 2008 Crash E-Waves

This chart highlights the affects of stimulus measures over the last three years.  Keystone posted this chart a couple weeks ago and it is now copied and presented by various news outlets. When QE3 occurs in the near future, it may only result in a measley 100 handle gain for the S&P's; we will find out in the weeks and months ahead.

The Fed's QE rallies show the five wave formations. Note how the stimulus measures, as they increase all over the globe, are having less of an affect over time. QE1 was announced since the markets were in free fall early 2009. QE2 was announced since the markets were going over the falls in summer 2010. In July-August 2011 the waterfall crash occurred. Note the importance of the 200-week MA as support. The Fed announced Operation Twist to bounce markets, then the pink circle shows the pop when Chairman Bernanke announced low rates thru 2014.

LTRO1 was announced in December 2011 by the ECB which started the latest rally shown in teal, straight up from 1200-ish. LTRO2 has no affect since traders were told it would occur when LTRO1 was announced. Note the negative divergence that identified and is identifying the tops.

When markets continue dropping in the coming weeks and the CRB drops under 300 that will indicate QE3 is ahead, but, as the chart shows, QE3 will only perhaps muster up perhaps a hundred spoo points as the law of diminishing returns occurs. The trigger for QE3 will be when the CRB drops under 280. The hope by Chairman Bernanke is that QE creates a wealth effect and helps jump-start the economy as folks buy more products since the 'feel' more wealthy, then companies employ more workers and the economy becomes self-sustaining. As they say in Brooklyn, 'Good luck wit dat.' In this technologic age with Twitter (thank you to all the loyal followers of the Keystone Speculator and Keybot the Quant sites by the way), Facebook and the Internet in general, this strategy will likely prove ineffective since traders and the general population are becoming more aware on how this casino game is played. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.