US Markets - Mar. 17, 2010

Well it seems we are right back where we started...not exactly. The last time the DJIA was at this level back in January, the euphoria was almost at a fever pitch...that is until it wasn't anymore and the market proceeded to fall 600 points within 3 trading days. But that was in the distant past, as was the sub prime crisis, the banking crisis, and the sovereign debt crisis. Oh thats right...the markets still have not factored the sovereign crisis in yet. The Greek crisis is really just the canary in the coal mine when it comes to Europe, not to mention the US. The same accounting gimmicks that were used in Greece, were used in Italy, Spain, Portugal, and by countless state and local governments here in the States. Ultimately this will lead to the dollar losing its reserve status...and massive inflation in the US. However, as far now...there is zero inflation on the horizon...even with the Feds ultra-accommodative monetary policy. Yet no one questions and asks why? Deflation. The DJIA is testing the upper end of its range once again...with anemic volume and a short-term overbought condition, once the DJIA turns... it should erase most of the gains for 2010 in short order. There is only so much the rubber band can stretch before it snaps...and the run in the last few weeks is just about one for the record books. A weekly close below 10600, should jumpstart a near term sell-off...and break the retracement wedge...Good luck and good trading. -Dio.