Over the coming years, the Bernanke and Geithner era will be studied as much for it failures as it will be for its successes. One cannot help but feel they have unleashed a mechanism distorted by the carry. A constant supply of money turned into risk capital as returns needed to beat inflation and competing fixed income benches have a extremely low bar.
Markets are always unpredictable and the mechanics in place are rarely perceivable. Current daily low volumes and ranges remind me of years ago in the pits where the adage was never sell a quiet one. No one is sure of the score on that rule but quiet moves inching on daily new highs or new lows usually explode into wild stop-loss ranges. Reversals dwell on those explosive days and just when victory is claimed from the momentum side, the battle is lost.
