Can You Do The Twist? (DIA, SPY, IWM, QQQ, GLD)

Markets were pummeled today despite news of the Fed’s proposed $400 billion “Operation Twist” and improved existing home sales.

It seems that the markets do not want to or do not know how to twist to the new news of the Fed intervention. Operation “Twist” entails a $400 billion bond swap by buying long term securities and selling an equal amount of short term securities in an effort to stimulate the economy. The move would also buy more mortgage backed securities.

Either way, markets did not twist in cooperation.

The Republican party does not want to twist either, especially since the Fed’s move comes after top Republican leaders sent Dr. Bernanke a letter on Monday, instructing him to stop easing the economy in order to restore business and consumer confidence in the economy.

The Fed’s news also comes after President Obama and his new friend, Warren Buffet, called for tax hikes on the wealthy and passage of the President’s new Jobs plan earlier this week, both of which will have a hard time twisting their way through Congress.

In any case, the Fed’s decisions further illustrate that the Fed, President Barack Obama, and Congress are out of time, money, and dance moves, as nobody can seem to twist us out of this mess of a political and economic gridlock.

In other news, 22 more banks have officially left the TARP program, and Bank of America, Well’s Fargo, and Citibank took a downgrade by Moody’s. In better (hopeful) news, August existing home sales grew 7.7%, a new 5 month high.

I like to twist, but this is getting way out of hand.