I’ve recently been thinking about the “big picture” on the FTSE-100 and am wondering if the “rule of three” will come into play soon. This is where the market’s reaction to an event changes on the third time it occurs. The FTSE has been in a bear market for the last twelve years and (I believe) we are approaching the third bear market rally peak. This peak also looks like it will consist of three peaks around the 6000 mark. So is it time for the market to finally accept the seriousness of the Western world’s debt crisis and there to be a full-blown stock market crash?
Then there is quantitative easing (printing money). The US and UK have done it and the markets have been desperate for the Eurozone to do it. Now that the ECB has formally announced that it will be buying unlimited quantities of Eurozone bonds is it time for the market do decide that this isn’t the panacea it has so far assumed? Yes, it boosts share prices making the well-off feel richer, but it has done very little to really boost economic growth. I am looking for the Dow to hit 14,000 on the prospect of US QE3, but then for a reality check to hit hard.
