Monday, May 18, 2009

Stock Market Update - 5/16/2009

Where's Bernanke?

I'm sure you are familiar with the children's game 'Where's Waldo'. The idea is to find Waldo amongst a camouflage of graphics. The S&P 500 lost some 5% for the week and we have to wonder, where's Bernanke? I panicked a few weeks ago when Bernanke's right hand conspirator, Tim Geithner, was making a speech somewhere early in the morning as the Dow was opening lower. My panic was calmed as I noticed the location of the event was in Washington. Wheew! At least our main man was close to the printing press. Without it, we have nothing. And fortunately, neither Bernanke nor Geithner is one bit afraid to unleash the power of the press. Why am I somewhat negative, you ask?

Well, in the last year, all of the investment banks in the US have folded. This past week has seen the bankruptcy of Chrysler. Any day now, GM will follow. Housing continues to collapse and unemployment continues to rise. Job creation is negative and governmental lying continues to be downright pathological. For instance, House Speaker Pelosi claimed she was 'misled' by the CIA on waterboarding but there are some alleged documents that would prove otherwise. No one can tell the truth about anything anymore. When that happens, I have to think things are terrible. Why is the lie so necessary? Why does our government talk about 'green shoots' of economic reprise when the facts are so diametrically opposite? Why does our government think they can run banks and auto manufacturers and health care when they can't even get my mail to me on a consistent basis? Again, they lie because they know that we cannot handle the truth. The government said that retail sales slid .4% but the number would have been a tenth worse if it weren't for an uptick in auto buying. See, someone should tell the car makers since they are more busy preparing for bankruptcy than they are building more cars.

In addition, the 'economy' that we speak of these days is a worldwide economy. Sony announced that they lost a billion for the year and Panasonic lost four billion. Toyota's sales are way down and oil tankers are dropping anchor. Reality is a bear! Unfortunately, bears don't eat money. Otherwise, Ben and Timmy would have them all at a fat camp by now!

Let's look at a one-week intra-day 60-minute bar chart of the Dow for the week ending 5/15/09. Yes, the Dow was down but you can see the week's total loss was due to about 3 hours of trading (3 long red bars). This is not in and of itself very significant these days. Almost all trading movement is done in short bursts. The question is really why didn't Bernanke step in to halt the week's downslide? After all, he is the new keeper of the stock market. Without him and his stock market interventionist role, we have nothing. Well, for one, since the Fed started the current rally on March 10, the Dow has come a long way. A cool off is okay. Two, the markets' leader, the banks, have come a very long way on their crumbling pillars of deceit. A cool off is okay. This gives the illusion of an actual 'market' when in fact, there is none. The Dow goes where our new government wants it to go. I suspect the Dow will be rallied in the coming weeks to push it over the 9000 threshold. Why? This was the last lower high in the downtrend. Then, Ben can say the 'downtrend' has been broken. All it takes is money! Print on, my man!

Chart courtesy
One-week, intra-day, 60 bar, DJIA ending 5/15/09

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