Janet Yellen was quoted as saying there are gigantic holes in the financial system and warns of another potential financial crisis. Now that’s funny. The woman, along with Bernanke, brought us 8 years of 0% interest rates, the printing of almost $5 trillion and in concert, had Europe and Japan print and actually go into negative rates enabling a massive, massive, massive, massive…did we say massive debt and leverage build-up around the globe…now warns us of trouble that would have been caused by her and her buddies. How precious!
The market experienced another strong reversal to the upside yesterday, the 2nd in 3 days. As we said yesterday, the importance can be significant for now. We say this because AGAIN, major indices held important, gargantuan, monolithic support levels that have held 3 times since late October. A hold does not mean we are off to the races but a hold can be built on. We outlined several reasons for the potential yesterday. 1) Those support levels being vital. 2) Huge bearish sentiment finally showed up. 3) Oil price crash a boon to the economy. 4) It’s December. 5) How far markets had dropped in just 3+ days. The DOW down 8%, S&P down 7.75%, NASDAQ down 8.1%, NDX down 8%, Russell 2000 down 8.4%, SOX down 10% and the TRANSPORTS down a whopping 12.5% in just over 3 days…not to mention misery around the globe. 6) The most important part of the equation, the Fed now moving to have the market’s back. We cannot continue to tell you how important this has been throughout the past decade.
And something we did not mention yesterday…trade. This morning, there was supposed good news on trade as China announced this, that and the other thing. Futures are up nicely on the news. So…another chance for a decent low. We are all for it sticking. Just know that if at any time the lows are taken out, we suspect all hell could break loose. But for now, looks like another low but don’t blink. Rallies and drops have lasted days, not weeks…and keep in mind, everything remains BELOW longer term moving averages/resistance. And lastly, don’t blink!