I do not think Chairman Bernanke is getting involved in these days, he must be primarily concerned about the USD and US Treasuries at the moment, or inflation. This country has still a huge debt to service, even if it stops borrowing now and we know it won't. The markets are merely 5.5% off from the highs, this is nothing compared to billions of dollars at risk for the borrowing costs, if the rates go higher. There is also the risk of foreigners selling more the US equities because of the weak dollar. I would think that the Fed would start to act after some 8-10% decline this time and stop it around 10-12%. The US equities will be attractively priced for a long term buy and hold there. No institution should step in here, if the correction stops here and gains another 8% toward the new highs and then there will be a bigger crisis with the credit and USD. I expect the trend to stay down until Sep or Oct, the credit growth rate at the banks is also still declining, no new money is coming in for a while...
Maybe, the market will form a right shoulder this summer, toward the final lows in fall...
- kisa
Kisa, an excellent point of view and I cannot offer anything to say otherwise...thanks