Word that Quantitive Easing may be extended in order to quieten the Markets may have been the cause of today's great rebound. However, the trend is still downwards.
Perhaps the slope of the downtrend will moderate. On the other hand, once the Bulls see that the QE rumour is not bringing a full recovery, the down-plunge could become as sharp as before.
The fall of the SPX500, according to my graph, from 19 Sep to 17 Oct 2014 was 9.4%. The rebound over the last two days was a creditable 3.6%, but falling back as I type.
The problem with extending QE once again is that it would be another temporary respite. Unless they decide to make QE permanent, in other words, instead of raising revenue required for government by taxation, to keep on printing Dollars. The end-result would be to continuously increase prices, with a proportionate continuous decrease in value of money.
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