By Gareth Soloway on November 4th, 2010 11:46am Eastern Time
The media is finally catching on, letting the public know exactly what the Federal Reserve has been doing for months if not years. I discussed this two months ago and just in the last two days, the media has started to talk about it. What has the Federal Reserve been doing? Manipulating the markets to inflate asset prices. Why would the Federal Reserve want to inflate asset prices? It increases the perceived wealth of the public. When the average American sees their 401k moving higher, they are more likely to spend money. The spending of money then causes more of a recovery itself. The Federal Reserve is attempting to start the cycle or jump start the economy by pushing assets higher artificially.
This is a very dangerous game the Federal Reserve is playing. They are artificially inflating asset prices by pumping massive amounts of money into the system and pushing the U.S. Dollar lower. In reality, the public is gaining little to no real wealth. As the Dollar drops 10%, the markets have increased approximately that amount. The average American does not understand this and will go out and start spending. At least that is the hope of Ben Bernanke.
As mentioned earlier, the media is now finally all over this. The fact that they are reporting this means it is probably nearer the end than the beginning. Why? When the media reports it, the last average investors hear it and invest, thinking the Federal Reserve will push the markets up indefinitely. In reality, they have been doing this since 2008 and have already done another major cycle of it in the last two months. Can the markets go higher? Absolutely. As long as the Dollar continues to move lower, the markets can go higher to a certain point. However, the SPDR S&P 500 ETF (NYSE:SPY) tagged the double top from April 2010 today. This level was at $122.00. Near term, this should be a resistance point.
The markets are extremely strong today based on this continued idea of the Federal Reserve artificially inflating asset prices. It is not a true market any longer but that does not seem to matter. The Dollar is getting crushed, below the 2009 lows. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $21.95, -0.19 (-0.86%).
At the bottom of all this lies another bubble. Just going back to the year 2000, the technology bubble burst, the Federal Reserve lowered interest rates to near zero and created the housing and financial bubble, that then collapsed and they are again at work, pumping more money into the system and making money free to borrow. This will create another bubble. Note that each bubble is bigger than the last. This is a scary thought considering how big the financial crisis was. To gain more insight, analysis, guidance, swing trades and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
#1 Rated
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By Gareth Soloway on November 4th, 2010 1:07pm Eastern Time
This video discusses the manipulation of the markets as the Federal Reserve continues to inflate assets artificially by pumping trillions into the system. The technical levels are analyzed on the SPDR S&P 500 ETF (NYSE:SPY) and on stocks like Apple Inc. (NASDAQ:AAPL). The Dollar is also discussed in depth. PowerShares DB US Dollar Index Bullish (NYSE:UUP) is getting crushed, trading at $21.98, -0.16 (-0.72%). This video reveals everything you need to know to master the markets, understand the manipulation and profit from it. Enjoy and come join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
#1 Rated
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Quite a powerful Set up here. Nice support on the black line, then we get the inside bar, followed by another but this forms a pin after rejecting a move lower. Monday sees the breakout. Entry on break of Mother bar (Red Candle) stop can be low of pin.)
