The S&P is at a fairly critical point at this time. We can see that the market can either fall back to its previous lows, or it can resist such moves and fight another today. The question is - to what extent is the Fed and other central banks going to support this market.
This market has ceased to be a product of supply and demand. Its all about Fed decisions. You can't be a good market analyst in this market; you would need to be Ben Bernacke's psychotherapist.
I suspect it is ultimately the break of that long term downtrend, i.e. a break in the S&P above 1178points, which is ultimately going to stimulate the market, or see the market fall back to its lows. Bernacke has stated that they will support the market. Just how much he does though is up to his arbitrary whim. That is what happens with highly interventionist (statist) market regimes. The idea that you can know the market, and respond to price signals is the rhetoric, but the reality is that, like the stock market, pricing is being determined by some guy with a lever somewhere. General prices that is. You would think the Australian market is strong at the moment. There is a shortage of housing stock...and yet no one is building. Its all a facade. But that is one facade which will not be allowed to collapse because too many of you believe and depend on it. Just as a lot of junkies depend on their daily heroin dosages. Is now the time to question your principles? Probably, as we role through another election of conspicuous stagnation, but at the very least the time to think was in your school years when you debated public policy and economics, and alienated the libertarians among you.
At this point gold is at a support level. There might be some consolidation at this point.
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Andrew Sheldon www.sheldonthinks.com
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