According to a well though-out plan…

“The most effective stimulus is rising stock prices, not government spending”. Alan Greenspan, September 26, 2010.

When Greeny said this a few Sundays ago, it was obvious that the current “powers that be” were about to take a page from the Maestro who got them into this mess in the first place. He had been in this place before and was able to successfully navigate up, up and away from it each and every time. But when he knew the pyramid was way off balance, he stepped out and away. You must admit, his timing was perfection.

The Jawbonig by the FED and the execution of lowering long-term rates through Treasury buying has served to add more liquidity to the liquidity trap that we are building for ourselves. But that won’t stop the delirium of Wall Streeters who “know” that buying commodities and everything else is the answer.

Forget about the mortgage mess for a minute and think about how this is done. As we already know, the Algo’s are first-line programmed to follow the DXY. When it drops, the Dollar carry trade grows. Add to it that the Japanese are giving away free money and you get more rocket fuel. Bless those Central Bankers and those liquidity-providing computers!

As we have forecast, we will rally to test the yearly highs. The speed in which this is happening is beginning to quicken. We will get close or make a marginal high. Then all those smart folks who sold everything for the safety of bonds will feel the need for greed.

As of right now, considering all the really horrible fundamentals, there is little–short of nuclear war or an oil supply disruption–that can derail the test of the highs. The run in gold and other commodities is semi-parabolic now and the performance anxiety of the remaining market participants is intense.

Our march towards “burning the hedges” is almost complete. Another few weeks and we will be there. Don’t exit just yet, but prepare your sell tickets…