Federal reserve working over time to save the S+P from a collapse.

OK, before you dismiss this post as conspiracy theory, image you are the federal reserve.   Imagine that you have accepted unto yourself publicly the "mandates" of maximum employment, stable prices and moderate long term interest rates.  Image that your approach to these goals in the face of a deflationary credit environment is to prop up confidence in any way possible in order to reignite what Keynes called the "animal spirit" of the herd.  In other words, mindless consumption. 

Imagine that after 5 years of throwing the kitchen sink at the problem that unemployment is worsening and that bubbly stock and bond markets exist all over the world.  Imagine that your models (which are far more sophisticated than my completely amateur, "spare time" EW models which have proven very accurate on many, many occasions) are showing that the markets are about to take a turn for the worst.  What do you do?

Answer: you do more of the same which has not worked so far in the ridiculous hope that something magickal (sic) will happen that will wake up those animal spirits and get the debt Ponzi moving forward again.  You can see the invisible hand of the federal reserve performing direct intervention into the stock market indices IMO.

 I've  been watching the S+P form an ending diagonal for some time now.  I think this is the end of a 3rd wave.  The confirmation that this run is over will be a break back down into the channel that is sustained.

 The herd just tried to break down but was pushed back up violently by some invisible hand.  Bernanke and his operators at JP Morgan, etc. know as well as I do what the trigger points are for the herd and he wanted to push the leaders back into the corral before the whole herd got momentum and animal spirits in the wrong direction.  Once the herd begins to stampede, the cowboys have to get out of the way.  They act like they are controlling things with a bunch of fancy suits and confident talk but the herd is growing very restless.  The herd is soooooo much bigger than the government that once it decides to abandon this Ponzi pumped market that there will be an unstoppable rush for the door.  Last one out is left holding a empty bag.

 I'm sticking by my long term view for the S+P which is stated here.  In short, this ending diagonal will break down then bounce so as to form a declining double top and then all Hell will break loose as the Federal reserve somehow admits that it can no longer manipulate the markets and that the cards will have to fall as they may.  I don't know what form this admission will take.  Perhaps it is an admission that tapering is not possible and that we need more stimulus, never ending stimulus.  I don't know what it will be but the chart says it will happen in months not years.

Again, I think it has to happen before the boomers can collect their retirements because the money they think they have is simply an accounting statement right out of a Madoffian con game.  All the boomers who kept on voting for more stuff for themselves will soon figure out that they were living in a delusional, something for nothing fantasy.