After the Fed announced QE2 would end in June, as originally planned, stocks continued to move up last week. This week, however, has been ugly, and not even Bin Laden's death can induce a rally. Is this a delayed reaction to QE2? Of course, the Fed may use other "tools" to pump money, but the fact they're ending QE2 has to mean something..at least symbolically. Or maybe it's a combination of the QE 2 ending announcement plus the traditional "sell in May" effect?
The market isn't going to "buy willy-nilly because of QE continuing to June 30". At some point before June 30, the market will begin to discount the end of QE2.... could be now, could be a bit later.
Well, I think we've been due for one since last Fall, but the market hasn't agreed... I'm just asking for curiosity's sake. I don't base trading decisions on hunches like this or fundamentals. However, a lot of times tops/bottoms occur around key economic changes (mark-to-market accounting change in March '09, Fed stopped buying mortgage-backed securities in Apr '10, etc.)
Technical Analysis tells the story here. Sometimes the markets are at a sweet spot from a Technical Analysts perspective and they do what they have to do regardless of the news. If you watch Bloomberg enough, sometimes you'll see someone say "I don't really know why the market is rallying" (or falling). At these times, its funny how sometimes the newspaper articles will try to attribute it to something that isn't likely a factor. SM