Major averages initially gapped down on Thursday due to negative news from China and possibilities of a quantitative easing slowdown in the coming months from central banks in the US and Japan, then clawed their way back to close near breakeven as the argument was made that any slowdown in QE won't be for a number of months. That said, Wednesday's high volume reversal was a big negative. The market is trading down in the premarket.
With QE is the main reason for the bull market that began in 2009, any concerns about a slowdown in QE could cause a market correction, so with increasing concern that QE will be slowed in the US and Japan in the coming months, it is best to keep your stops tight. That said, QE is still firing on all cylinders so the market could very well find a floor here and move higher as it has done in the past. Posturing by central bankers that QE will be slowed has not resulted in any central banks actually taking action to slow QE, so the current weakness in the markets could be short-lived as have others in the past when Bernanke or other Fed governors spoke of slowing QE. The world remains mired in recession and economic statistics out of the US showing any improvement remain suspect, so QE will continue as long as major world economies remain weak.
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