Bernanke Turn Around Tuesday???

Top Line: The stock market put in another low for the move on Tuesday. From there the buyers came in and gave us some upside excitement. The turn may have finally arrived. We think the market is in for a pretty good up move over the next ten days or so.

Before the market opened on Tuesday, there were a few things going on: first, the selloffs in the overseas markets; second, the ugly PPI news, of course the core rate was ok, right; third, was the news from GM that the company was cutting their dividend and cutting some employees' benefits and bonuses. Those items paled in comparison to the big event that was coming up after the opening, that being the big speech by the esteemed Chairman of the Federal Reserve, Ben Bernanke.

As the market opened, prices dropped for about a half hour such that the Dow dropped well over 200 points. At that point Bernanke gave us the bad news that we all know--inflation prospects were picking up and there is pressure on the economy. Wow, something totally unexpected...yes, sarcasm is still in our toolbox. Since Bernanke gave us the ok to think these things so the market decided to rally out of the obvious news.

There was another item, coming from the SEC. The SEC made some waves by suggesting that short selling should be curtailed in Fannie Mae and Freddie Mac. Of course, there was some intimation about short selling in general. Are we supposed to presume that short sellers are the reason these stocks went down??? We don't have an ax to grind but the idea that stock prices won't go down because you stop short selling is just plain ignorant.

Ok, let's get back to it...After the run up and with about an hour to go in the day, the market was sporting some hefty gains. The Dow was up about 65 points. Then, going into the close, the market sold off with the Dow ending down over 90 points. These days have been extremely volatile and trading is treacherous.

Then after the close, INTC announced positive results. What will Wednesday bring? We are sticking with our rally call but we have not seen one so far. As the Dow keeps dropping in what seems like slow torture people are getting a little nervous.

The stock market is in the late stages of the...well, we'll get to all of that tomorrow evening. We'll spend some time in our next post to do some tech talk, Elliott wave style. For a preview, we think we are in a devastating c wave that will last for a long time. There will be tradable bounces during this wave but, as we have seen, calling them are very tough...surprises are to the downside.

FSI: 83.38 (still dropping but well above the March lows)

We think that we need to start paying attention to a couple of other indicators and we'll bring those into our discussion tomorrow evening as well. For one, we'll keep track of at least one of the volatility indexes. If you have any others you might be interested in, please leave your ideas in the comment section.

And, we do apologize to those of you who come here for the pictures of Jackson--we don't have any new pics. We'll try to get more over the next few days.