|June 19 inverse head and shoulders w/breakout|
However, since the bear market ended in March 2009, the Federal Reserve's quantitative easing programs were able to backstop bearish setups entirely (see June 2009, August/September 2010, and hedge fund manager David Tepper on CNBC), which in turn lowered interest rates, raised asset prices, and boosted the economy as a result (maybe not employment). QE2, the Federal Reserve put, was enacted in 2010, and now the Fed just announced QE3. So that's why I wasn't entirely convinced that a new cyclical bear market had begun in June. The pattern seems to be that the S&P 500 and other "risk" assets sell-off when quantitative easing programs end or fiscal stimulus fades (fiscal cliff?).
Technically, the market looks good at this point, I'm not going to deny that. But I still have an overall bearish bias on the market like I did in June. So I guess I'm turning into an overall "perma-bear" at this point. I'm looking out for the next downside setup similar to May-July 2011, when QE2 ended, Congress raised the debt limit, and the U.S. was downgraded by S&P.
|As of Friday September 21, 2012 +9%|
|The Art of the Fed's head and shoulders backstop |
(Fed put and Tepper rallies)