As opposed to some of the present or future Presidential candidates, Chairman Bernanke knows how to put out a message that gets attention, positively moves markets, and potentially will energize the economy. Wouldn't it be nice to have a President or a Senator or a Congressman who looked at what needed to be done, and did it? I know...many, many "experts" have second guessed my new Presidential candidate for the last 3 years, but I think this guy was hugely instrumental in keeping the US (and the world) economy from repeating those mistakes of 1929.
Yesterday's Fed announcement is a manifestation of what our Monetary Composite has been telling us. The Fed will do whatever it can to keep this stock market moving up and our economy progressing. I know, after the recent crash, your bloodshot eyes are having a hard time seeing that up-move, but even this huge panic "dumping" of stocks that drove the Arms Index above 7 has not broken those support levels from the upside break-out of last August.
Also, don't forget that yesterday was the day that we saw our Psychology Composite move to P2, its next to most bullish level. This was helped in part by the significant level of smart insider buying, as measured by the Gambill Insider Ratio, along with the quick dumping of stocks by the dumb money, as measured by the Rydex Ratio. That is of course just part of the story, since our Psychology Composite includes many other valuable components, but the bottom line is - like the correction of last year - all three of our key components (Monetary, Valuation and Psychology) are now in position and ready to take on the lemmings that love to turn bulls into bears.
You almost never go straight up after a bomb like this recent market crash. However, we expect in the next three months to see a slow steady progression of improving stats. And yes, we also expect that Bernanke will make sure that he directs the mountain of cash sitting in money market and savings accounts to the stock market - that he is going to do all in his considerable power to keep going up.
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