Thursday, March 19, 2009


After the breathtaking announcement of the Fed yesterday that Chairman Bernanke has pulled out the heavy artillery, today the market did more of the same. The S&P went to the fifty day moving average, lingered and rolled over. Apparently inertia is more powerful than a promise.

I do think that ultimately the trillions of dollars of stimulus will move the needle off deflation and start to move us higher. However, the injection of public funds is not keeping pace with the destruction of private debt. It is still hard to imagine the word "trillion" with any number higher than "one" in front of it, but I think we're going to have to go there.

From the trading standpoint, today I bought only gold and resisted entering equity or fixed income trades. Technically we have another lower high and will wait to see how it resolves. A move in the next week below S&P of 666 will indicate the downtrend is still intact. A close above the 50 day average for several days would be constructive as would be holding above 740 on a pullback.

John Barnyak