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<p>[QUOTE=&quot;Bluesboy65, post: 1145528, member: 23329&quot;]OK, here are a few of my thoughts on the questions I posed:</p><p><br /></p><p>1) If QE2 really does end in June I think it will be a true no kidding acid test of the health of the recovery in equities.&nbsp; When the first round of stimulus concluded in late spring 2010, the DOW lost about 1000 points until QE2 was announced in August 2010.&nbsp; The injection of stimulus worked like an injection of steroids and here we are at a multi year high on the DOW.&nbsp; I think business leaders are weary of the “recovery” and the lack of hiring (the jobless recovery) is an indicator of their low level of confidence.&nbsp; Corporate balance sheets are flush with cash because they are not investing in the future (i.e. people &amp; equipment).&nbsp; I therefore expect a pullback in US equities.</p><p><br /></p><p>2) I expect the pullback in equity markets to be sudden and prior to the official end of QE2 in June.&nbsp; Institutional investors and others will want to get out of the market before it experiences a decline; with end of QE2 being the catalyst.&nbsp; So I think investors will want to hang around long enough to wring out all of the bullish sentiment created by stimulus but as everyone tries to get out of the market first, there will be a rush to the exit.&nbsp; My guess is this will happen mid to late May.</p><p><br /></p><p>3) I do expect some of the money leaving equities will move into metals and other commodities, especially oil and gas.&nbsp; I think bond yields will move markedly higher as we will have way more Treasury offerings than we will have buyers (at current rates).&nbsp; I’m wondering if the increase in bond yields will be enough to sop up some of the money withdrawn from equities.&nbsp; Because of the pin action in the bond market I really expect the Fed to step back in with more stimulus (QE3) to put a lid on yields and “calm” the market.</p><p><br /></p><p>Also, I think the dollar index could move higher IF there is no further quantitative easing.&nbsp; In reaction I think we could see a significant pullback in silver and gold.&nbsp; Having said that I think it will be short lived as we continue to have big problems in the bond market and people seek a safe haven.</p><p><br /></p><p>Regards,</p><p><br /></p><p>Bluesboy65[/QUOTE]</p><p><br /></p>

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