When the time window comes, if the trend wants to change its going to change. IF anything what the Fed did this week is take the first baby step to restoring confidence to a fragile economy and dare I look at the political landscape I think he’s sending a message to the austerity party that he’s not afraid of them. In fact, if Mr. Bernanke is a student of socionomics he might also realize that by keeping the market going higher another month or so he probably helps Obama build a lead in the polls that he’ll nurse to the end, thus insuring there won’t be huge budget cuts next year.
At the end of the day, it was none other than the great Bill Clinton who bragged on himself just 2 weeks ago of how he managed to balance those budgets when he was President. But that was a time of prosperity and it was easy to get rid of deficits in those days. That was the right prescription for the 90s. This isn’t the 90’s; if we don’t watch out we are recreating the 30’s all over again. Those who don’t learn from history are doomed to repeat it. We should be grateful that Chairman Ben is not channeling some inner Herbert Hoover.
For this week a lot of charts are getting close to important resistance levels, namely Gold and Silver. I suspect there should be a digestion and consolidation. I suspect there will also be a reaction to the downgrade by Egan Jones. But we stick to the charts and with a VIX as low as it is and a market that finally got a whiff of euphoria we are still building towards a high in October at the big time windows. Does it have to happen? NO! In fact the QE3 event ruined a perfect long term 4500dg Gann square of 9 peak dating back to the 2002 bottom this week. But for the life of me I can’t see how we don’t get a major change of direction in October if the VIX ends up near some historic low. Be careful, participate where you can but do not be the last man in.
I’m for bold action, even if it won’t be perfect. It’s not the perfect action and it’s not a panacea. However I sincerely doubt it will create the kind of disaster some of you are predicting. The one thing we have going for us here at Lucas Wave is our strong belief in our symmetry calculations that have guided us very well these past few years. Our Gann calculations have worked out better than even I could have imagined. The chances of a repeat of 08 are small. So we support Big Ben’s actions.