We have seen the Dow's support tested just below 12k three times this Friday, and this is the number we should look for. Three times and the support line is official. This is short term however, and support could break and go lower. Look for a bounce and then 12k, or just below, to be tested on three separate days during the next few weeks before QE3 is announced.
The bears, however astute they are, want the world to fall apart before QE3 is announced, but they forget that it is not a numbers game Bernanke is playing, but rather his policy. He needs the recovery to stay on track, and the data suggests that it needs additional support. Besides, he needs to monetize the debt, for if he does not, then rates rise. He can not afford for rates to rise.
The President's Working Group on Financial Markets have access to the most liquid book known to finance. They have access to the Treasurie's holding, as well as the Federal Reserve's. Support is needed at Dow 12k to keep pensions returning 7%, and since this is the only thing returning interest above inflation on the markets, besides precious metals and other commodities that do not define monie as PMs do, there is great need to keep equity up. The dollar and all fiat will be continued to be sacrificed at the alter so to keep the fiat ponzi rolling.
Equity will trade in this range until QE3, and then because it will be truth that governments are insolvent and have no choice but to rely on fiat issuance, money will run to corporate debt and equity. The first move will be to go after the government collateral, and that is gold. Then oil will be sought, and then the other corporate collateral will fall in line. By Fall, the house of cards will be undone, and the scramble for real assets will be established. It will start this month, with QE3.