(Click on image to enlarge)

BKK banking index courtesy of CotckCharts.Com

Last night, stock futures were roaring on news of a Fed bailout, but not so much this morning. 

The broader market limped at the open and is now up.

SPX S&P 500 Daily Chart 

(Click on image to enlarge)

SPX daily chart courtesy of StockCharts.Com

The boxes represent bounces off the support level at 3800. I do not know where the close will be, but so far this bounce looks feeble. 

I suspect we would have had a a lot more short covering if the Fed and FDIC allowed a mild haircut. 

What's the Message?

Could it be that the banking sector is so feeble and has so much risk of contagion that the Fed felt forced to do a bailout? 

If that's not the message, then someone please tell me what it is. 

SPX S&P 500 Monthly Chart 

(Click on image to enlarge)

SPX daily chart courtesy of StockCharts.Com

Most of the entire move up from the bottom in 2009 was due to an ocean of Fed liquidity. 

A routine bear market would take about half off the S&P 500, roughly to the 2400 level. And that is pretty much what I expect.

In the length of time it took me to make these charts, the S&P 500 slipped into the red. 

SPX S&P 500 Weekly Chart 

(Click on image to enlarge)

SPX weekly chart courtesy of StockCharts.Com

That is one possible ewave interpretation of where things might be. If accurate, we have had one big wave down, a correction up, and we are starting another wave down. 

Wave threes are usually the longest and strongest. 

Again, that is just one possibility. It's more of a technical what if. I have not looked at how others me be charting this from an ewave standpoint

Ewave aside, this is a terrible looking chart technically.  

Fundamentally Speaking

Fundamentally, things are arguably worse. 

Inflation is not under control, the banking sector is in shambles, the Fed was forced to back off policy moves, wages are still moving higher, and corporate profits will be under huge pressure.

Severe bear markets always happens at the tail end of Fed-induced risk taking and this one was the biggest yet.

A 50 percent decline from the top is the minimum one should expect. That does not mean we get it, but it should be the expectation.

 Yellen Said "No Bailout" But It's a Huge Bailout of the Banking System

For the banking background to this post, please see Yellen Said "No Bailout" But It's a Huge Bailout of the Banking System

WSJ Comment: "You can’t run the most reckless monetary and fiscal experiment in history without the bill eventually coming due. The first invoice arrived as inflation. The second has come as a financial panic, with economic damage that may not end with Silicon Valley Bank."

The Journal said the "economic damage that may not end with Silicon Valley Bank". I suggest the economic damage cannot possibly end with SVB.

More By This Author:

If There Are No SVB Bailouts, Will There Be Financial Armageddon?
SVB Will Not Slow Fed Interest Rate Hikes, Expect A Half Point In March
Silicon Valley Bank Collapses, 93 Percent Of Deposits Not Insured! What Now?