Saturday, March 27, 2010

Stock Market Review - 03/26/2010

Storm Clouds Threaten the Rally

I have a feeling that Presidente Bernanke is about to get even busier than he is now. We all know that the immediate goal of the Fed is to get the Dow back to 11,400. That's the pre-Lehman collapse point at which the rest of the world really began to lose serious money as the bear market of 2008 cut its destructive path across portfolios. The process of picking and choosing which companies to be given a life preserver and which companies were allowed to drown was perplexing to foreign investors. To them, it seemed hypocritical to save one and dissolve another. It seemed illogical. They thought we could, or would, simply save all the financial sector. However, the foreigners don't know, or realize, what a corrupt, diabolical, despicable, degenerate country the US has become. The companies the Fed saved were companies that could serve the Fed. Period. To the foreigners who invest their money in the US, that seems unfair. Maybe it is but the Fed needs foreign investors. Therefore, they have felt beholden to return the Dow back to the pre-Lehman collapse level. As we all know, the Fed completed their coup in August of '07 and now have complete control of the country and the stock market. Through repurchase agreements with their shill banks and outright equity purchases, the Fed can make the Dow dance whenever they turn on the music. We finished the week of 3/26/10 above the 10,800 level on the Dow. What now?

I think the Fed is gathering their forces for the final push over 11,000 and then to 11,400. Technically, this will complete the fifth leg of an Elliot Wave. Technically, 11,400 would be the target from the reverse head and shoulders that bottomed in March of 2009. Add to that, the Dow's ascent has been accompanied by a volume descent. That's a red flag. The following chart shows the gathering storm clouds.

Dow 2.5 yrs ending 3/26/10
Chart courtesy

We also have the piling on effect of a massive health tax that will soon work to drain earnings from US corporations and render them less competitive with their foreign counterparts. Higher taxes equal lower economic growth. Period. True, the populace elected a person that promised 'health care reform'. However, the populace of the US is profoundly ignorant and hopelessly stupid. They still don't realize that the real power of the country has been usurped by the central bank and the person sleeping in the White House is simply a finger on the hand puppet of which they manipulate for their own gain. What is their gain in higher taxes?

The central bank's goal is to drain the resources of the US and redistribute the wealth of the US into the hands of the central bank. They do this by extending credit to stupid people that sit in Congress who spend the country into insignificance and bankruptcy. Perpetual debt becomes the business of the day and that debt can only be perpetuated through higher taxes that pay for the credit default swaps that have to be issued to guarantee the income stream on the derivatives that are sold from the securitized sovereign debt. Real health care has absolutely nothing whatsoever to do with the new tax. It is about raising taxes that justify the derivatives that perpetuate the debt. And who makes money on the derivatives? The Fed, Goldman Sachs, JP Morgan, and Bank of America. They are leeches that are latched on to the aorta of our country. Sadly, the populace is far too ignorant to even have the first thought about the real intent of the evil Fed. But, we still have some rally in the market before the storm clouds start dropping rain.

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