2/14 Daily Commentary

Stock market looks best with another high.  I'm in a waiting game for I1 or the break of support, whichever comes first.  I will not short on a completed wave count.  The dollar index has completed it's first 5 up, signalling that money is draining out of risk assets, even as they continue to climb.  Bonds have completed their base are are ready to break hourly M/A resistance to the upside.
First, the dollar completed it's 5 up and it's abc retracement is too shallow in price and time to be considered complete.  78.40 - 78.50 is a rough goal later on tonight.

Bill Gross has exited Pimco out of U.S. treasuries down to a base position.  As the Fed's been buying the big funds were selling.  A snap-back rally is warranted into April. 

The currency market and bond market are telling me that there is a lot of money moving into risk-averse markets, especially if bonds break to the upside from their base.  I1 is up through 2/2, pauses, then continues on through 3/25.  The weekly technical is overbought but a reading of -12 would be the clear sell level.  I'm looking for the daily technical to hit -22 in order to provide a clear timing signal apart from the wave count.  Absent this I must wait for a decline to take out critical support.  From the I1 sequence I would anticipate a double top with the initial top any day now up through 2/22 and the secondary 3/25.  The critical support M/A is moving up as the market thrashes.  Currently at 12,200 a support break would be indicated at 12,055.

America has an understanding that something is very wrong.  The Tea Party success acknowledges this. However, there will not be success in resolving the debt problem until leadership really understands how and why we got into this mess.  Any addiction requires first abstinence then self-understanding in order to avoid relapse.  Whether a 12-step or psychoanalyst provides the platform an addict must come to a realization of the hole that exists that was being filled and the enablers that made access to the drug/behavior possible.  An individual re-orients himself away from enablers and towards role models in the process of bridging between abstinence and freedom.  The process for America requires awareness at the highest levels of the following:
1) Economic history of the U.S.
2) History of economic thought in the U.S.
3) History of constitutional circumventions that gave inordinant power to the Federal government
The fundamental error that has plagued legislators and citizens alike is the belief that the Great Depression occurred due to structural flaws in capitalism, that is private market failures were the cause. 
My understanding of history is that neo-classical economists created the quantity theory of money that tied economic activity to the quantity of money and the level of interest rates.  This school was founded in 1890 (Marshall) and led to the creation of the Federal Reserve.  This institution held rates too low in the 1920's, the Treasury lent $300 in gold to London in 1925 and allowed them to hold their rates low all the way into the latter part of the decade.  Realizing their error the Fed then raised them in late 1928. At the same time the U.S. had obtained a large amount of demand for capital goods for rebuilding Europe during the period from 1919-1928 and this market dried up as the reconstruction wound down. The Fed held the trigger, pulled the trigger, and then pointed fingers in the early 1930's.
This combination of conditions prompted Keynes to develop his general theory and the world embraced it.  Prior to Keynes, economists invited to congressional committee hearings would scold and remind the legislators of the sanctity of the public accounts.  Keynes turned this upside down and invited them to spend, borrow, and maintain interest rates at close to zero forever.  Stepping into the mind of a congressman their motivation is to keep that job as long as they can because it is an ego-trip.  They are serious custodians of power and like getting up to go to work.  Keynes fit right into their self-image.  Let's do something about this, that, or the other without worrying about debt.  A marriage made in hell. Neo-Keynsians (after JFK and LBJ brought the stagflation of the '70s) preach similar gospel so are invited to congress on a regular basis.  Now we have a strict Keynsian as head of the Fed.  They are all addicts.
The only way I can lay out the process on an historical and theoretical thread is in a book.  I don't know if I have the time for that.  Can the powers keep applying Keysian doctrine in a high-debt environment?  The American people have said no.