The rally off Friday's lows may have looked ferocious to those who were short, but from a Hidden Pivot perspective it has been deliberate and even a bit timid at times. Notice in the hourly chart how each thrust over the two days of the rally has stopped shy of breaching all prior peaks to the left of it. Instead, the ascent has unfolded one low-wattage impulse leg at a time. As of Friday's close, the futures looked ready for yet another push -- to at least ____ if that Hidden Pivot's midpoint sibling at _____ gives way. However, bulls will need to do just a tad better, pushing past a tiny, look-to-the-left peak at _____, to clinch their case; otherwise, it may require a re-test of the recent low at 111^21 to put in a durable base.
Monday, June 15, 2009
Bear Rally Provides Cover for Spinmeisters
– Posted in: FreeBailing out the economy and the banking system has been such a brazenly corrupt, mendacious and, ultimately, doomed enterprise that one could almost forget for a moment how very clever the perpetrators are. If we needed proof that these guys are the slickest behind-the-scenes spin doctors around, consider the following two headlines that ran on successive days atop the Wall Street Journal's front page. "Rate Rise Clouds Recovery" was the grim news that greeted us last Thursday, on day one. The article described how, despite the Federal Reserve's explicit strategy of buying as much Treasury paper as it takes to hold market rates down, particularly in the mortgage sector, rates are rising anyway, and steeply. In fact, 30-year fixeds climbed to 5.79% from 5.00% just two weeks earlier, suggesting that market demand for mortgage paper is drying up despite the Fed's strategy of direct monetization of Treasury debt (a.k.a. "quantitative easing"). But get this: On day two, as if to reassure us that Treasury's borrowing is well under control despite the fact that the opposite is true, the spinmeisters co-opted the Journal's front page with this well timed policy leak: "Fed to Keep Lid on Bond Buys". Are we actually being asked to believe that, absent the acceleration of direct purchases of Treasury paper by the central bank, demand from other sources will suffice to keep rates from rising further? Just Like the Recovery of 1931 The key to having the public ignore the blatant contradictions in the two headlines is to have the news media conflate economic recovery with the spurious recovery that has been occurring in the stock market. The spinmeisters have been making as much hay with this deception as they can, even if the bear rally in stocks harkens directly back to an equally spurious recovery in 1931.
