So we now have a clear pattern of news-flow and how it relates to markets. That may mean it will no longer work, but here it is anyway:

Since the equity markets are a cesspool of inside information-flow, markets will drop in front of bad news and then rally on the actual release of that bad news. The same holds true for good news, but less so in this Central Bank Controlled marketplace. I know it sound obvious, but after this morning’s action, it should be reiterated.

Are you surprised by this mornings action after the JP Morgan news? Most were, but nothing surprises me any more. The Costanza market remains alive and well!

 

 

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How many times to I have to say the same thing? I feel like Bill Murray in “Ground Hog Day”. What? The market is living the past two years over again and again? In a similar time in the calendar? You don’t say!

Again, a stimulus-filled Fourth Quarter posts decent economic strength and the Hoi-Polloi INSISTS that it will extrapolate and continue through the rest of the year. And it simply does not. But in each of the past three years there has been hundred of billions of dollars in “assistance” to the investment community and that money stays locked in the closed loop of liquid financial investments. That capital is used for the “Bernanke Bid” that stays under the market regardless of the news. We are currently in the countdown for the next round.

Now, once again, the markets are dealing with all kinds of really shitty news. Even earnings are disappointing. But the hope of Central Bankers to the rescue keeps the Bid rather firm. But don’t let that fool you as there is much damage under the surface. Add that to the legitimate fear of a failure of the finacial system in Europe, again.

The “Europe is Saved” rally started near SPX 1200. We peaked just above 1400. Testing 1300 makes perfect technical sense and it won’t be so bad. Of course it won’t be easy. Emotions must be flared. We must face all out destruction or complete Nirvana. The truth is somewhere in between.

 

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You can understand WHY the markets are on the defensive. The possibility of a Euro-bank run is very real, as it was late last year before they found $1.3 trillion.

This week the fears are justified but EVERYONE KNOWS that Bernanke MUST come to the RESCUE of Europe during tomorrows PR-fest. If not, then expect SPX 1310 to be tested in short order. If Big Ben whips it out, then a test of 1400 is in the offing. But it’s all just a band aid.

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I noticed something interesting. Gasoline prices bottomed on Christmas day and began to rise the very next day.

They rose until Easter Sunday. They reversed the very next day.

What’s next? They fall until Labor Day? Or until November 6th?

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As you know, this is the primary lesson that I was taught from all my years on TV. It is a simple message and exactly what viewers want to hear about the stock market.

I have also been articulating a simple message but it is usually drowned out by the noise of the day to day market. After all, it has been proven that the markets spend the vast majority of their time flat to up. This is fact. But when the government targets asset prices, it is a disaster just waiting to happen. Forget about all the news, THIS single aspect of the markets is what is most disturbing to my analysis.

Some of you might think I’m a PermaBear but I am not. I promise. My goal has been and will always be to save individual investors from the pain that has happened and that will happen.

I was bearish in 2007 but watched in horror as the markets levitated based on a belief that the FED could save the day. I had Bull/Bear debates on Fox where I was ridiculed for my position of caution. I even looked at the camera and told the audience to “Listen to me carefully, sell your stocks now”. I got a ton of shit off camera about it.

Our unstated policy is to boost asset prices. Because what company will hire while their stock is going down? What consumer will make hearty discretionary purchases when their 401k is dropping in value? 

And that stocks won’t go down in an election year? Remember the last Presidential election? Most every country touched by financial crisis has turned over their government, except for Germany and us. Hmm…

Look, unless Europe gets another trillion or so by summer, there will be an epic run on banks over there. It has already been postponed once. And the market geniuses that believe a strong fourth quarter extrapolates into a strong first or second or third quarter has again been proven incorrect. Without massive manipulation of the numbers, GDP should be negative most everywhere in the civilized world.

My April 17 top call was a guide to the future. I’m not good enough to be that precice and anyone who is simply got lucky. There will be plenty of chest pounding rallies and drops but we’ve got more work to do. And waiting for Bernanke is not an investment strategy.

 

 

 

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Business Journalists are pressured to write stories that bring their sources financial gain. NO FUCKING WAY!

http://www.talkingbiznews.com/?p=32597

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