What's To Decide?

Below is classic retrospective analysis that tends to favor indecision. Liquidity, provided by currency devaluation, is driving stocks as well as many other assets higher. This continues until the next hemorrhage phase. Hemorrhage phases, or contractions in liquidity and confidence, tend to be ‘anticipated’ by an increasing number of divergences of price relative to the trend, market participation, and money flows.

Headline: Decision Time for Stocks

In normal times, when a market stalls at a price level and finally punches through, it is known as a technical "breakout." Demand is able to absorb all supply thrown at it, and then some; simple economic theory tells us prices should move higher.

The problem is that this sort of textbook analysis has not been working for months and arguably since the financial crisis blew up in 2008. Now with the Standard & Poor's 500 index poking its head above recent highs, we have to wonder if we are about to be faked out once the market digests Federal Reserve Chairman Ben Bernanke's press conference comments Wednesday.

Last month — just before the Japanese disaster — the S&P 500 made a classic move below the rising trendline that supported it for six months. Four trading days after the Japanese tsunami, the market reversed to the upside. A breakdown was negated.

Source: finance.yahoo.com