General
The markets now have the two largest central banks on the planet, the Fed and the European Central Bank, pouring fuel on the rally and providing the impetus for U.S. markets to follow-through on last Thursday's breakout to higher-highs. The Fed announced a third, large purchase of bonds on Thursday in an effort to bring down long-term interest rates and spur growth. The Fed said it would buy mortgage-backed securities at a pace of $40 billion per month. In addition to bond purchases, the Fed said it intends to keep the benchmark short-term interest rate – the federal funds rate, at nearly zero until mid-2015. The prior guidance on the first rate hike had been late-2014. The Fed took the aggressive action out of a growing concern for the economic outlook, especially the anemic labor market.
The committee’s vote was 11 to 1. Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, dissented, as he has at every meeting this year.
Stocks and precious metals rallied strongly on the news as all the 'QE' ducks seem to be in a row with both barrels firing from the European Central Bank and now the US Federal Reserve. Both gold GLD and silver SLV ETFs had pocket pivot buy points, their third technical buy points over the past month as each has moved sharply higher during that period. Followers of this missive should be well-invested in precious metals by now based on this string of buy signals over the past month.
Stocks
Housing and housing/building-related stocks did well on the news of Fed MBS purchases. We have apprised members of suggested buy points in Pocket Pivot Review reports.
Meanwhile, big NASDAQ leaders Apple (AAPL) and Amazon.com (AMZN) moved to all-time price highs, providing strong technical underpinnings to the current, accelerating rally.