Obviously news events have been trumping the normal ebb and flow of market for now 3 years in a row. Any positioning taken on charts can be destroyed in the single swipe of a bad Tim Geithner speech, the refusal of Congress to pass TARP on first pass, or the vice versa type of rescues. Traditionally you look for a bottom off (a) a retest off old lows and/or (b) a sharp down day, followed by an intraday reversal - on volume - with a close at or near the highs. But those are old rules. Now you just await a Sunday night bailout.
While the EU "quantitative easing" is not of the US, UK, or Japanese kinds reports this morning are that central banks are quickly buying government debt. This lays the groundwork for any of you worried about tiny issues like the trillion ($2?!) plus pension problem in American states [Jan 5, 2010: FT.com - US Public Pensions Face $2 Trillion Deficit], the Medicare unfunded liability, or any other problem. Answer: there are no problems anymore. When push comes to shove we now clearly see where all roads lie. Once a problem ignored for years or decades hits a crisis point money will be printed and holes will be plugged. [Mar 12, 2010: Pappa Malmgrem Tells us What Foreigners Think America's End Game Will Be] Any and all worrying is simply for theoretical reasons - this is the no risk world and without limitations to spending. Frankly I am upset a million dollars is not being sent to each America this morning ... just for kicks.
The biggest mistake I certainly made in the past 15 months is not realizing how powerful QE would be in the U.S. - the rush of liquidity overwhelmed a market where there were actual net outflows of monies in 2009. And since investors believe there is no risk, and the central bank has their back, they can buy at will and all dips must be bought.
I thought this morning I'd be writing about a gap but somehow despite a 4% gain in premarket & due to Friday's immense intraday trading range there was not a gap on the S&P 500 or Russell 2000 chart. Only the NASDAQ had a small one. So I expect it this is not filled very soon (i.e. today or next 2-4 days) it will be filled in 2-3 months as that has been the typical pattern.
Other than that, the only question is waiting on the moment when these major indexes clear resistance of the 50 day moving averages which they've all fallen below. Once they do, the mandate by central bankers is clear. You keep buying, at any price, at any value. You must assimilate - fiat money is toilet paper.
Unlike my mistake in 2009, I shall be a good lemming and pile in once these moving averages are cleared as the Beranke Forcefield now extends globally. Risk has been offloaded to Saturn and other celestial bodies, no longer a factor on Earth and as speculators (or long biased mutual funds) we can only hug in glee.
p.s. let me tell you, anyone with any sort of meaningful exposure to a short position this morning - or puts - simply can have an entire year destroyed.
p.s.s. Fannie Mae announces it needs another $9 Billion. No problemo - just print it.
Best Of FMMF
- 1: Warren Buffet Piles on Europe
- 2: [Video] Jim Chanos Returns from Europe, Even More Bearish on China
- 3: A Chart to Open Our Eyes - Staggering Changes by Multinationals in Employment Behavior 00s vs 90s
- 4: Futures Blasted on Dexia Woes... and Poor Preliminary China Data
- 5: Market Working to Worst Thanksgiving Since 1932
- 6: Et Tu, German Bonds? Poor Auction Raises Eyebrows