More oil on the fire ?20 May 2012 21:14
Calling Mr. Bernanke. The market is calling. It wants this man to get rocking with another QE program, even though it won't work and would be totally inappropriate. Anything to help with the political situation at hand this year. The world is in terrible shape from Europe to here at home. The Philadelphia Fed Report two days ago suggests many parts of this country are already in recession. A huge minus reading came out of nowhere. This on top of other reports that have showed things are clearly on the decline. Earnings haven't been great this quarter in terms of future guidance. Always exceptions to the rule, but the majority of leading stocks have been crushed on their guidance reports. I'd like to say, especially in the commodity world, but it's really just about everywhere you turn.
Mr. Bernanke is going to be under tremendous pressure to act sooner than later as our stock market heads lower. He knows better than to panic, but if the pressure gets bad enough, you get the feeling he'll crack and hyper inflate again. The majority of people cannot deal with it, but if it helps save the stock market temporarily, he'll do it simply because he knows the stock market is the wealth of this country. If the market goes away, so does the economy. If that should happen, then he looks like the bad guy. So the next several weeks will be interesting in that you'll probably hear more and more rumors about the coming of the next QE program. Rumor will eventually turn into reality, I'm afraid. The heat is on Fed Benanke now. Let's see how he handles it.
Leader after leader, in sector after sector, has broken down. The key here isn't so much that they broke in price, which, of course, is huge, but that the break downs were done on some huge volume days. You want confirmation. We got them. The gap downs are enormous with that volume, thus, any move back towards those breakdowns will be sold heavily by the money that made it occur in the first place. Many folks won't come rushing in due to this technical damage, therefore, hard sustained rallies won't be easy to come by, although we will have some powerful one-day moves higher from deeply oversold levels. They can really be powerful, thus, you really don't want to short the market when it's this oversold. You need to see the RSI's come out of the 30 area at the very least. So leaders are broken. Volume has confirmed. We're staying oversold longer than normal. We've lost the 200-day exponential moving averages. On and on it goes.
It's starting to smell like a bear market, but only if we lose those long-term up-trend lines off the last bear-market lows, can we say with certainty that the bull market is dead. 1250 and 2650 are those key levels, and again, you'll see them in this report tonight. Be smart. Cash is a wonderful thing for now. Watching 1292, which is now the next area of support followed by 1260/1270, and then the final line in the sand at 1250
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