Did the Bush-Bernanke Offense Do Anything for the Economy?

Sep. 2.07 | About: SPDR S&P (SPY)

A Bush/Bernanke offensive sent stocks higher on the notion that both men have donned their housing bubble/credit crunch capes, and will be our heroes. Our spies in Jackson Hole snapped this shot of Bernanke being pulled over for speeding while rushing to monitor the credit situation.

The FHA part of the Bush plan will help an entire 80,000 people qualify for FHA insured mortgage refinancings... 80,000. Yes, 80,000. Did I say, 80,000? I keep saying it thinking that if I say it enough, we'll somehow become impressed. While I'm not for bailing out nitwit speculators who knew just enough to be dangerous, 80,000 compares to 2-million adjustables that will reset over the next two years. Oddly enough, on Thursday night, the administration pre-warned the press that this Bush program would cater to certain subprime borrowers who were facing foreclosure. Yet, on Friday, the President told us the FHA insured mortgages for - the chosen 80,000 - would be for people with "good credit." Good credit, and subprime are not synonymous, so the administration is apparently unclear about what a 'prime' borrower is, and what a 'subprime' borrower is. Let's just hope the President won't declare the subprime battle won, and done in a few weeks.

While that market rallied on Friday, the fade into the close was noticeable. The minute chart below shows a quick move to the exits in the final 15 minutes. Unless there's more great news in the view of the bulls over the weekend, we could see an extension of Friday's late-day exodus come Tuesday.

The chart below shows engulfing red candles following white bodied candles where stocks ended off the highs of the session. This happened in early August, and when the market peaked in mid-July, which is something to mindful of.