Time For A Bounce

One of the things mye eagle eyes missed this morning was that today was an FOMC day, and I didn't realize it until i saw the market dropping fast just after 2:15. the FOMC is going to keep rtes right where they are until mid 2013, thus throwing in towel on any chance of an economic recovery and, basically, making it the next guy's problem. The resulting sell off was predictable, and, as usually happens on an FOMC day, was also wrong. After half an hour the market reversed and went into a scorching rally, finishing up 5%. That makes the likely hood of a multi day bounce pretty high, as we have a MACD histogram less negative than the day before (a fairly reliable, but not reliable enough to trade off, indicator). If anything, we might be looking at another huge shorting opportunity.

Nothing quite says "recession" like a crash in oil prices, and USO is now below it's previous yearly low, and got a pretty weak bounce today. This is all the excuse Bernanke needs to put "Operation QE 3" into gear.

Oh, wait, not so fast. Gold is supposed to be pulling back with a recession coming, and it's doing the exact opposite. We'll let CNBC chortle about the "gold bubble", but something is going on here.

 This isn't supposed to be happening, either. The debt downgrade was supposed to make treasuries unnattractive, but the opposite is happening. By the way, it is interesting to note that the stock market waited for the bond market to close before rallying.

With all the turmoil in the markets, the dollar should be screaming higher. It's not, That is trouble.

I have not read the test of the FOMC statement (and I understand there were 3 dissenters this time), but Bernanke appears to be commited to following a course that, so far, has not worked. What he thinks will be ddifferent this time is beyond me, but then again, I don't have a Ph.D. In 2 years, we'll see which one was right. If we are still here.

I will have the new highs update shortly.