The question one must ask is whether this is a technical bounce off a short term bottom, or the beginning of somthing more sustained.
Barton Biggs of Traxis Partners is saying today that he expects a thirty to fifty percent rally off this bottom. His reasoning is historic comparison off lows this severe.
If sustained, is this a genuine economic recovery or another monetary reflation and resultant bubble in financial assets.
The charts speak to this, not definitively, but with sufficient weight to be important. Yet another bubble sets us up for a great cascade fall down to 545, with a potential final bottom as low as 380.
The numbers may start to be skewed and distorted on the chart if a more serious monetary inflation in the dollar begins. The commodities and the quality of earnings in the SP 500 will be the 'tell.'
But make no mistake. The Fed and the Obama Administration are firmly committed to monetary inflation and a weaker dollar as another short term cure for the economy.
If the government does not make the fundamental reforms to the financial system and economy to bring back a balance with real wealth creation, it is difficult to see how the dollar and the bond will emerge intact from the next bubble without a further devaluation of 50 percent at least.
