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Stock Markets Sudden Plunge on Obama Economic Policy News

Stock-Markets / Stock Index Trading Oct 26, 2009 - 03:14 PM GMT

By: Guy_Lerner

Stock-Markets

Best Financial Markets Analysis ArticleThis morning's sudden sell off on no apparent news must have the Obama economic team in a furor. After 7 months of unrelenting buying, the stock market actually went down. It was a terrifying sell off as the S&P500 lost 2% of its value in less than 60 minutes. This put the 401 k's and IRA's of average Americans at risk. Something must be wrong. What that something was wasn't readily apparent, but the economist in chief was going to get to the bottom of it.


Later that day, President Obama was seen asking the tough questions of his economic advisers in a conference room adjacent to the oval office. This chart was flashed on the far wall. Federal Reserve Chairmain Ben Bernanke said this was a graph depicting strength in the economy, but other more savvy observers said the chart had an uncanny resemblance to a 5 minute bar chart of the S&P500 Depository Receipts (symbol: SPY).

Figure 1. SPY/ 5 minute

Pointing to the area in question (highlighted by the bracket), President Obama said, "What the hell happened here? You guys told me that this thing would never go down. Don't you know that millions of 401 k's and IRA's and the economic vitality of this great nation hangs in the balance?"

Larry Summers spoke up. "Well there was a problem, sir."

President Obama: "You told me that there weren't going to be any problems. What was it?"

Larry Summers again: "Well, it was Tim's day to man the buy button, and apparently, he had to go to the bathroom."

President Obama interrupts: "For 1 hour?"

Mr. Geithner: "Was it really that long?"

President Obama: "Look here (pointing to the chart). That is one hour. That is too much pain. The folks on CNBC were in an absolute panic. How else are we going to show those on Main Street that we are doing a great job?"

Timothy Geithner: "You are doing a great job, sir. If you hadn't spent trillions of dollars, you wouldn't have saved the economy."

President Obama: "That's true Timmy (as he looked at the upward sloping curve on the figure in front of him). I did save the economy. Ben, what do you think we should do?"

Fed Chairman Bernanke: "Drop dollars from helicopters? It has worked before"

Larry Summers: "Been there, done that."

Fed Chairman Bernanke: "I got it. We will call out the air force this time to do the job. We can deliver more money a whole lot quicker. We don't need those army helicopters anyway."

President Obama: "Great idea, Ben. I have been trying to figure out a way to use the military. The air force is always so efficient, and using the military during a crisis is always a good way to bring out patriotism. Someone call the air force, please."

And with that the meeting was adjourned. Mr. Geithner went back to hitting the buy button. Mr. Bernanke went back to his offices to figure out more ways how he can say that America supports the Dollar. Mr. Summers waited in the wings hoping it will be his turn soon to be in control of the buy button.

President Obama strolled back into the oval office confident in knowing that he was at the center of creating America's new found prosperity. That's what the economic charts told him anyway.

    By Guy Lerner

    http://thetechnicaltakedotcom.blogspot.com/

    Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

    © 2009 Copyright Guy Lerner - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

    Guy Lerner Archive

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