Despite further weak economic data from the US, the Dow Jones gained nearly 3% yesterday, mainly after the close of European markets, so there may be an element of catch up in the European trading session today.

The reason for the sudden injection of buying enthusiasm in the states, is the possibility of a further round of economic stimulus, that may come out of the Central Bankers meeting in the US later in the week, where any further measures to shore up the weak US economy could be announced.

So we have a situation where the worse the economic data is, the more likely that QE3, a third round of Quantitative Easing, could happen and the higher equities might go, as short sellers do not want to get caught in a massive surge back into equities at these lower levels.

Lots of "would" and "could" going on but nothing concrete happening yet and expectations are building that the Federal Reserve will make a positive announcement on Friday that may be seen by markets as the start of QE3.