Coordinated Desperation

I was looking for the market to go higher, but this is ridiculous.

The Fed, ECB, BOJ, BOE, SNB, and the Bank of Canada lowered swap rates in a coordinated action. Even China lowered reserve ratios. All on the same day. The S&P is up over 30 points.

Look this action straight in the eye. It is desperation.

Just as large players often muscle the futures markets to gain the upper hand (jamming it higher in order to get short, for example), the world's central banks are likely trying to achieve the same end.

"These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013." (emphasis mine)

Note that this action is just another temporary fix. It also adds to the argument that there is a worldwide shortage of actual US dollars (as opposed to dollar credits). This will eventually have dramatic implications moving forward, and will be bullish for the US dollar when (not if) debt liquidation occurs.

Not today though. And probably not for a short while. The dollar is down hard today, as you would expect.

With today's S&P action, the opportunity for new highs above 1292.66 has been reborn. It does not make me bullish. But it reinforces that I must always be a pragmatic trader and be ready for both sides at all times.