Guest Article
With the holiday season in the rear view mirror and volume slowly creeping back into the marketplace, I can’t help but wonder what lies ahead. The optimist in me is hopeful that the economy will continue to repair itself and the financial issues that plague the federal government, state government, and local governments will just go away as the economy rebounds. The only problem with my hope is that massive debts and deficits do not simply disappear and I fear the problem will be a long and lasting one.
Federal Reserve chairman Ben Bernanke indicated that unemployment numbers are likely to remain stubbornly high for an extended period of time. He also made it clear that Quantitative Easing II was necessary and needed to be continued in a vain attempt to keep interest rates low. Since its inception, treasury rates have done nothing but increase which begs the question whether the program is really doing anything it was intended to do.
In addition to our domestic debt issues, unemployment claims, and poor housing market we find that the crisis in Europe while somewhat muted, continues to manifest in a negative fashion. Nearly every where we look we are surrounded by fundamental issues which directly impact risk assets. These issues have been constant for quite some time and the S&P 500 has shrugged them off and powered higher. The S&P 500 has put on quite a run since the March 2009 lows, and while we have had several corrections and a “flash crash” along the way, we have yet to see a major correction turn into bearish market conditions.
Is price action today an early warning sign that lower prices await us in the equities market. Is the U.S. Dollar going to breakout above the 50 period moving average and challenge the 83 price level on the weekly chart? read on
By J.W Jones
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