Before Bernanke Speaks

  • Posted on: August 25, 2011

Tomorrow Bernanke Speaks.

My guess is it will be a non-event.

Unless things un ravel more, and i define unravel, as unemployment accelerating above 10% or 2) Europe Defaulting on its debt: I can’t see a reason for a QE3.

I think, you might see a push for a debt forgiveness act, or something along those lines, where, basically, US consumers can clear the decks once and for all.

There is a feeling that the banks are sitting on a ton of cash. There might be a push to let them use that cash and write off a ton of consumer debts.

During the 1929 Great Depression this was one strategy employed to try to lift the burden of over-leveraged or hopelessly underwater borrowers.

Its just a thought, but you never know.

I think there will be real reluctance on the part of Bernanke to appear to be political in any way shape or form. Hence, I think, he will reiterate the stance that they are going to leave rates at zero and hope for the economy to catch an updraft and see some hiring. They might even accept some short term inflation, as the lesser evil of having a deflationary melt down on top of what we have seen already.

11,421 is resistance in Dow Cash. 11,674 i would sell. I would sell 11,930 with both hands.

In the S&P cash, its 1180, then 1211, then sell heavily at 1244. These are upside targets. They should be sold into initially.

I think its a good strategy now to try to buy dips with a disciplined risk reward ratio. Risk one unit to try to make 3 on a rally.

Grains: Sell Christmas Corn (DEC) at 7.50-755. Risk ten to 12 cents heat.

Sell 14.00-14.35 beans: Risk 20 to 30 cents.

I’d stay away from wheat. I’d sell rallies at 8.15 if we get there.

That’s about it.

CER