The Turning Point
by Tyler Durden
Some technical analysts are calling for a major rally from here, but the massive injections of financial insulin don’t seem to be reviving the sagging global economy.
The stock market and economy are both at a turning point. Analyst Martin Armstrong’s Economic Confidence Model ™ set the turn date as June 13/14, 2011.
In the stock market, a number of technical analysts are issuing strong buys based on the negative sentiment of so-called “dumb money”–small investors–and the number of stocks below their 50-day moving averages.
Others such as Armstrong are predicting that Greece has no alternative to default and the Euro is untenable as “one size does not fit all.”
It is rare to find a market where the technical evidence is so compelling for a strong rally yet the fundamental basis for such a rally so lacking. Exactly where do Bulls think the growth and rising profits are going to come from?
The answer for the past few years has been massive Federal Reserve/Federal intervention and stimulus, and a weakening U.S. dollar that boosted overseas profits via the legerdemaine of currency devaluation.
But three years of these policies have accomplished nothing but load the taxpayer with staggering amounts of debt: none of the causes of the 2008 implosion have been fixed or even addressed. As Armstrong notes, the massive interventions did not shorten the crisis, they have prolonged it.
This reality has filtered down to the political swamp, and now the politicos are hesitant to bet their own futures on additional trillions in stimulus and quantitative easing. For the first time in memory, the Federal Reserve is on the defensive. Simply put, its policies have failed to accomplish anything except prop up a rotten, insolvent banking sector that needs to be declared bankrupt and swept into the dustbin of history.