Bernanke Day

The Maestro is dead, long live the Maestro.  Well, he’s not dead, just retiring but today the President picked Ben Bernanke to succeed Greenspan as the Federal Reserve Chairman.  We have mentioned Bernanke on several occasions in these pages.  We think he is cut from a similar cloth that Greenspan came from.  His actual policies when he actually takes the office may be a little different than the ones he has espoused over the past few years that he’s been in the spotlight but for now we can only judge him on what he has said recently.  So, we can’t say that we’re surprised at the President’s choice but we are disappointed that there hasn’t been another good choice out there.

The markets reacted much like a Bernanke nomination might cause, stocks up and bonds down.  Of course, he hasn’t even been approved by the Senate and will not take office for several months but the markets seemed to agree with us, bad for inflation and bonds, good for the stock market in terms of excess liquidity.  I repeat, we are a long ways off from his hand being felt at the helm of the Fed but the markets seem to think they know what he’s all about.

Of course, for us, today was not a very good day given the ramp job in stocks and the sell off in bonds, not to mention the little lift the precious metals took today with the anticipation of inflation.  So, here we are after two giant rally days, not back to back, but two big rally days none the less and what is the net of it all?  The Dow Industrials is still below last week’s high above 10,400.  Today’s volume was not as strong as it’s been recently.  The market is slowly working out the oversold condition with a modest increase in prices.

We don’t know exactly what to say here but the market is not done with its down move and should continue in that direction over the course of the next six weeks or so.  Yes, we will have these up days every once in a while to scare the bears and excite the bulls but we have try to figure out the intermediate term trend and trade it.  We are currently in a rally phase that is relieving the oversold condition and a reassertion of the down trend is waiting in the wings.  

Dow Industrials:  10,385.00   +169.78
RYVNX:  20.96  (sad)
TLT:  90.72  (also sad)