on the 15th of March, 2009 Ben Bernanke appeared on 60 minutes. One of the opening questions was:-
PELLEY when I called and proposed this interview about a year ago, your representative laughed out loud. And said, “The Fed chairman never does an interview.” I wonder why are you doing this?
BERNANKE Well, it’s an extraordinary time. It’s an extraordinary time. This is a chance for me, I think, to talk to– to America directly.
In extraordinary times what would our government do to turn things around. Answer: Anything they can, legal or illegal. Since March 2009 have we been dealing with a Managed Market for a Managed Economy.
Now many have suggested that the Fed (or PPT) is buying SP500 futures every monday night. I say nay – they are a pretty dour group and news would somehow have come out. Addittionally Gld and Oil have also gone up, along with most world markets and I cannot see the Fed trying to cause the price of Oil and Gold to go up. Of course if they printed a couple of hundred billion dollars and gave it to a few key banks, with the guidance to put it in the markets – then that wold account for all asset classes rising in unison.
Now that’s over then let us look at one of my predictive charts from last July:
As you can see, in this chart, I thought that we wold get back up to the major trend line of the bear market at 114 – we reached just over 115 so I was out by around $1. I did think the rally would complete by late November 2009 and, in terms of the SP500, it appears to have ended in mid January 2010 – which means I was out by about 6 weeks.
Now let us have look at the Major Bear Market trend Channel:
As you can see there have been several attempts to get out of the channel, including Oct 2007, spring 2008 and last Friday (March 4 2010). In prior attempts this initial escape was marked with an immediate (within a week) push-back into the channel and a decent sell off. If we take a close up of the last 60days action then we can see how important Fridays action was:
SPY Short Term
As you can see we gapped up to above the line in the low-volume Thursday night futures market. This meant that this critical resistance line never had a chance to be tested and upon opening all of the stops above it started to triggered. This resulted in a low-volume melt-up all day with a buying frenzy in the 3.30 to 4pm purchase-before-mutual-fund-Monday-ramp-up. This means that the SPY closed (both day and weekly) above the line. The volume was nothing to write home about and the market ended up extremely overbought with negative Divergences abound. For the bear case to remain intact the Bear Channel needs to be reentered early next week.
So what does this foretell – next week we either Crash like 1987 / 1929 or we move further into the world of make believe.
