At the end of the day, however, the gun is at the US Government's head. The political winds associated with the US Financials crashing (XLF) this week will force Geithner into this critical seat to head up the Treasury - the reactive media is demanding a bailout, and so are the banks. Paul Volcker himself just called this “the mother of all” financial disasters. They won’t take the time to find someone else for the job.
In terms of policy, today's Geithner grilling reveals a critical point for the US stock market - and that’s simply one of duration. He is clearly pushing out the expectations for the "fix" - and, importantly, Paul Volcker has his back on that. Understanding that The New Reality team of the Obama administration may very well be trying to set up expectations that they can over deliver on... that doesn't mean the immediate term "Trade" in the US stock market owes them any benefit of the doubt.
Next support on the SP500 is 788. I have been selling strength since the opening bell.
Keith R. McCullough
CEO & Chief Investment Officer