Bernanke to Bring Greed Back To the Markets

Forget greed. Fear and survival instincts control Wall Street and world markets at the moment. Markets have gone over a waterfall and have sent investors tumbling down, wiping out gains from the past year. Investors keep waiting for the splash but it hasn't come yet. And it won't come until greed returns and the market starts seeing bids again. Stocks tanked in Asia and have tanked in Europe so far on Tuesday. There are signs that we might be near a bottom--Germany's DAX, for instance, is up approximately 300 points from its 52-week low earlier in the session. The bottom, at least a short-term bottom, could arrive for US markets today, with Dow futures now up before the bell after being down more than 200 points earlier. Market players are expecting an announcement from Fed Chairman Ben Bernanke of a stronger stimulus pledge. Bloomberg News reports that by a 52% to 48% margin, respondents in a survey expect "the Fed would ease policy this year through monetary tools or statements. If the central bank acts, 59 percent said it would communicate that the federal funds rate, balance sheet or both will remain especially stimulative for a longer period or more specific amount of time." Words from Bernanke that the Fed is going to print will send investors scrambling to buy the market at these levels. Greed will once again be a force in the market. There will also be fear too, as investors will be scared of missing one of the best opportunities of getting in the market since early 2009 and after the so-called Flash Crash of May 2010. ACTION ITEMS:

Bullish:
Traders who believe Bernanke and the Fed are going to step in, might want to consider the following trades:

• SPDR S&P 500 SPY

• For leverage, try Rydex 2x S&P 500 ETF RSU which seeks to replicate twice (200%) the daily performance of the S&P 500 Index

Bearish:
Traders who believe Bernanke will remain quiet or that his words won't be strong enough to dispel fear, may consider these alternate positions:

• ProShares Ultra Short Dow 30 DXD, which seeks to correspond to twice (200%) the inverse of the daily performance of the Dow Jones Industrial Average Index

• Investors wishing to short the financial sector with three-times leverage, can buy Direxion Financial Bear 3X Shares FAZ

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