Global Central Banks are Easing Further

During the past two trading sessions, we’ve seen a very nice move higher in the major averages. The Dow surged more than 300 points Thursday, and midway through Friday trade, the Industrials were up more than 100 points.

Solid earnings reports from the likes of Amazon.com (AMZN), Alphabet (GOOGL), Microsoft (MSFT) and others helped inspire the buying, but the real driver of equity prices during the past two trading sessions has been global central banks.

The central-bank-induced buying began with European Central Bank (ECB) President Mario Draghi’s “dovish” surprise. Although the ECB left interest rates unchanged, during Draghi’s presser, he suggested that both growth and inflation were facing “downside risks.” He also specifically cited December as a time to “re-examine” current policies.

What the Draghi comments told Wall Street is that the ECB is going to implement more quantitative easing (QE) in December — and history tells us that when more QE is implemented, nominal stock prices go higher.

The central-bank-induced buying began with European Central Bank (ECB) President Mario Draghi’s “dovish” surprise. Although the ECB left interest rates unchanged, during Draghi’s presser, he suggested that both growth and inflation were facing “downside risks.” He also specifically cited December as a time to “re-examine” current policies.

What the Draghi comments told Wall Street is that the ECB is going to implement more quantitative easing (QE) in December — and history tells us that when more QE is implemented, nominal stock prices go higher.

The move higher during the past couple of weeks has pushed the major domestic indices back above their respective 200-day moving averages.

After the steep plunge in August and another plunge in late September, the move so far in October has been a welcome turn of events for the bulls.

Now the question is: when do you buy back into stocks if you have cash to put to work?

That’s the very issue we’re addressing right now in my Successful ETF Investing newsletter. Last week, we added some targeted sector positions for both growth investors and investors looking for aggressive buys.