Looking for a Catalyst…..and one more point
Our late coments yesterday point to the problem the stock market faces at the moment. Technically the S&P 1294 extreme downside objective looks more and more possible, probably today or tomorrow. That is the easy part.Â
Then on what fundamentas does an investor base a summer rally? It will not be better earnings. Ben missed his chance to change the game by setting a dollar rally in motion yesterday.  That leaves a joint dollar move coming out of shear panic. Bernanke and Paulson could do a joint dollar defense with other major countries participating as a prime possibility. In the end the summer rally will be based on a sharp drop in oil. Oil demand contraction is real, take a drive on the weekend if you can afford it, no one else is on the road. Plus look at the stock markets of China and India, they are in more trouble than the US.
So continue to watch oil, it is headed sharply lower and the wait will be short.
8:30 AM CDT
One more point. Probably the biggest mistake by the Fed yesterday was the comment that oil prices would be easing. That is true, but the more important point is that the Fed first has the job of changing the oil markets attitude, it will not happen by itself. The Fed has to change the dollar strategy for real, kick the oil market in the teeth, demand contraction will then take over and push oil prices lower.
8:45 AM CDT
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