What Are the Best Trades Ahead of Fed's QE3?

Oil and gold will make the best trades ahead of a potential fresh round of quantitative easing by the Federal Reserve, Joe Clark, Founder and CIO of Financial Enhancement Group, told CNBC.

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NYMEX crude oil has lost almost 20 percent in the past three months and Clark said that oil has been particularly oversold and represents a good trading opportunity should the Fed decide to print more money to help the economy.

“You have to look at oil and say: ‘All right, we’ve got an issue here,’” Clark told CNBC. “The probability of more QE, I wouldn’t say it’s 100 percent, but it’s extremely high. If you believe that, you have to look at oil and say: 'OK, that’s probably got to rebound,'" Clark told "Worldwide Exchange".

He also expects a rebound for gold , which has lost about 7 percent since March.

“I’m not a big fan of gold, I can’t eat it, I can’t sleep with it, it’s not one of those things I want to keep around forever, but if QE comes out you’re going to see those commodity prices rise,” he said. “Gold and oil are the two places that people can trickle into a little bit.”

Clark believes the positive momentum in the markets will continue, but he warns that the impact of fresh stimulus will be short-lived compared to the last round of QE.

“I believe you’ll see people pull out of the market before QE3 unwinds,” he told CNBC. “So you will see the positive response, kind of like 'buy the news,' but it will be sold sooner than what we saw in the last round of easing.”

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