Sunday, May 1, 2011

The Fed Inspired Stock Market

As the chart below illustrates, the S&P 500 is back at levels not seen since late spring of 2008, or not so long before the financial system briefly visited hell in a hand basket. Is history about to repeat itself? Is it time to go away in May?

Since early 2009 the chart shows the remarkable recovery of the benchmark S&P. The rebound is no doubt due to extraordinary efforts by the Federal Reserve to save its little vipers known as the banks through on going near zero interest rate policy, purchases of dead bankster assets at par, etc. The Fed's lubing up of the system has saved that system (for now) from utter collapse even if GDP is barely showing growth at a rate of .45% per quarter (basis the paltry 1.8% annual growth rate shown in the lastest gov stats).

Still, it's been all good for the stock market and in a perverse sort of way it has rejuvinated the financial lives of people on Main Street America who are invested in paper instruments via 401ks, pensions, etc. I have long maintained that one of the best tricks up the government's sleeve is to created a mirage of prosperity by fueling a bull market in order to make the Dow number look good to all of the mainstream media t.v. followers who get shafted out of receiveing real coverage of the markets. Of course, the flip side is the growing cost of living (inflation) and the not so crazy idea that eventually some sort of a dollar crisis will be sparked by the Fed's actions that could make 2008 look like a walk in the park.

So far, the Fed juice continues to work and the S&P may test it's old all time highs of late 2007 at the rate that things are going.  I won't be suprised if that happens.  Ben bucks are a good thing for Wall Street. So for as long as Ben Bernanke thumbs his nose at and taunts the monster on the horizon known as "dollar crisis", the stock market is likely to benefit, giving new meaning to the phrase, "climbing the wall of worry".

Simply put, I am still cautious but bullish on the stock market -- bullish for all the reasons I hate. Ultimately nothing good will come of the loose monetary policy of the Fed, or the do nothing but yammer and yap about fiscal matters on Capitol Hill. It is really a proposition of embracing the market's madness for whatever you can get out of it. Yes, make those dollars in the phony paper market and covert them to hard assets.

Yes, it is the fake money paradigm, but one that can be used to turn fake money into gold and silver. What fools those alchemists were.

$SPX - Monthly Candlesticks: "


$SILVER - Daily Candlesticks

While gold staged another powerful move higher on Friday, Silver seemed stuck, with a gain of a little more than $1. This has led to a massive flood of speculation into the $ZSL (ProShares Ultra Short). Those who are going double short on silver seem as if they are failing to realize that silver was tasered three times last week by margin hikes in the futures markets in an effort to reduce volatility. It's only natural that a commodity that is hit with a triple whammy of margin hikes would briefly succumb to a period of consolidation, much like a tased person would fall down at being tased and then (usually) gets back up on his own two feet. I realize that sometimes a good tasering can lead to death. However, the chart below shows a powerful long term bull market in silver that isn't going to be permanently disabled by margin hikes. The silver bull lives on (albeit a bit dazed) and I expect the price to moved ever higher.

As for those silver bears? They are going to be slammed and abused yet again. It will make the activities in a movie like, say, A Clockwork Orange, look like a little girl's teaparty. lol.

$SILVER - Daily Candlesticks: "


We are the Obama-nation. Feel desolate yet?

Ha! Just rambling on a Sunday morning.