From the Chart Store as seen on The Big Picture, a companion chart to the long-term chart of 30-year Treasury yields featured on the post just before this one.
(Click on chart for more detail.)
Just as most people "know" that Treasury yields are "too low", most people believe that a Dow short of a "10" handle is in a safe place for the long haul.
We also have the strange phenomenon of a prior vociferous critic of the authorities, Nouriel Roubini, supporting Ben Bernanke for a second term because he kept us from another Great Depression. Similarly, Paul Krugman likes Gentle Ben as well for the job.
I don't feel the love. Dr. Bernanke has clearly been guilty of failure to diagnose. Were he a physician and he did not spring to action until a massive heart attack had occurred, the fact that his patient survived in a weakened form would hardly qualify him to stay on the case, especially if his patient was the most important patient in the world. Even Zimbabwe changed course in a fundamental way. Bernanke should in humble fashion admit that the Greenspan-Bernanke tenure at the Fed has ended in utter disaster, and he should inform the President that he wants to either return to academia or go to the Street and make some personal money, but that it's time for new blo0d. But of course he's doing the opposite, just as the failed Large Complex Financial Institutions pretend that they never goofed, never needed bailouts, never received taxpayer gifts through the probably criminal entity of AIG, etc. etc.
Getting back to stocks, an analyst who must be unnamed and who has made some good calls the past couple of years put out a missive yesterday to his firm's clients in which he laid out 7 possible paths for the stock market through yearend 2009. He asked his firm's clients to choose which of the 7 they predicted.
Two of the 7 are moon shots upward for the S&P 500 (another 20% gain in the 4.6 months left till yearend, two are up about 10%, and two are unchanged. The seventh is somewhat bearish, down 11%, but that would only leave the index down 3% for the year. Not bad for a year in which several million jobs have been lost to date!
The contrarian says: what about a retest of the lows?
Who knows, but that such was lacking suggests, along with the declining volume on the stock exchange this summer, lots of complacency.
There are a lot of known unknowns and even more unknown unknowns that could provide either valid reasons for stock prices to move down, or at least the excuse for such.
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