Stock Market (S&P) Analysis: Everything is Just Peachy!

"Everything’s ok" so long as the status quo is maintained. Take JP Morgan as an example. It not only cut its economic forecast yesterday, but also warned of the dire consequences of a technical default if an agreement on the debt ceiling is not reached. (Read more here from Zero Hedge). To make a long story short, the cure, according to JPM, resides in raising the debt ceiling for something like the 75th time, this time by another $2 trillion.  Otherwise life as we know it (the present apparatus of the banking system) will end. It’s ‘lions and tigers and bears, oh my’, if those politicians in Washington don’t do something soon reckon our friends at JP. Put another way, JP believes that without the ongoing mechanizations of the US debt ponzi, the big banks are threatened and without them, you and I can’t live.

  

One of these days, I’ll do a separate post on the pandemonium that would result if the banking system unravels. Please don’t think that I am advocating that we see an end to the banking system tomorrow. I simply object to the entitlement attitude (the biggest of the welfare recipients) of the banking world. 

  

I see a deeper message in this: A two pronged warning not only to the DC political establishment but that JP Morgan and friends/demons are simply reminding the Fed to not wait too long to concoct QE3. The e-money needs to keep rolling in for the benefit of Wall Street, even if it has lead to our present economic situation of rapid deterioration. Double dip anyone? BUT, (and this is a big BUT) the wagering and guessing at the Fed (imho) centers on how much pain must be inflicted to get John IQ. Public to go along with more inflationary ‘money printing’. To some, yesterday’s 2% drubbing in stocks was too much. I’ve mentioned that 10% might be the tripping point for Ben to come to the rescue. Still others think a 20% stock market pullback might be needed to justify more QE. Pick your poison.

  

As this newsletter has mentioned in the past – until the QE and debt ceiling questions are resolved, expect plenty of chop and some drop in stocks. Ultimately, the DC political animals are inbred (with just a few exceptions) and tied to banks, and the biggest banks are the Fed. So we pretty much know the eventual outcome: More extend and pretend for the debt ceiling and more creation of so called banking reserves (equated to money printing) for the sake of the banks. It’s just that these puppet masters will add a little suspense and drama in the weeks ahead to keep the unaware guessing.

  

Do I have this figured out, or what? Really not hardly. Who knows what will happen, or what evil lurks in the hearts of all these players. Pass the Cheetos and the Coke, please? I need to watch some tee-vee! 

  

From a technical perspective, the 1300 area on the S&P remains very important.  Above 1300, the market is inclined to churn with some good up days and some bad down days. Below 1300, would be bearish  and would likely usher in more selling. Somewhere above 1340 would be neutral to bullish.

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