Perhaps Bernanke's grand academic research didn't factor in modern conditions. Low interest rates during a recession were certainly appropriate but everything else (stimulus, QE and even bailouts) you could've left out from my view. Yes it would've been brutal not bailing out banks here and abroad; but, the harsh pain may have been over quickly. And, if proper accommodative public policies were in place (tax rates, "fair" trade, energy independence and etc.) the economic comeback may have been quick, given the unleashed animal spirits. It's sort of like the dentist telling you he wants to remove your four impacted wisdom teeth one tooth at a time per year. No thanks. Let's get it over with.

Of course the Fed will continue its POMO activities with $60B in purchases over the next few weeks as outlined here. Watch out for the double $10B injection on Monday June 20 th, which is curiously just after quadwitching.

It's easy to second guess. But now what? Just a long hot summer ahead is all I see. This unemployment map from the WSJ today tells the tale in my opinion.

Everything was sold on Friday (stocks, commodities, currencies and etc) leaving only bonds as the safe haven of choice. Question: Why would you think the dollar is safe? I guess it's just repatriation.

So Thursday we got our rather weak oversold rally as expected but now the big negative economic picture is taking hold. There isn't much to add except to say we're again short-term oversold.

Volume expanded rapidly Friday reaching one of the highest readings in 2011 as this repeats previous higher volume (distribution) days. Breadth per the WSJ was quite negative approaching a 10/90 day.

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The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.

Continue to Concluding Remarks

I don't think academic studies from the Depression are automatically applicable to our modern global markets with HFTs, financial futures, ETFs and so forth. It's hard to second guess anyone and Bernanke is probably a good human being who's trying hard. That won't stop me from having fun at his expense ... snicker.

The sell-off didn't surprise me given the weak nature of Thursday's oversold bounce and for now anyway we maintain our short and large cash positions overall. The exception is in Lazy portfolios where with some we have some hedges.

Now we're short-term oversold and we could get another bounce higher Monday based on the NYMO especially. But, I've seen this indicator at -100 on some occasions. The VIX is starting to rise but put buyers are slow to come seeking protection which I find odd given current conditions.

Have a great weekend!

Let's see what happens.

Disclaimer: The ETF Digest maintains active ETF trading portfolio and a wide selection of ETFs away from portfolios in an independent listing. Current positions if any are embedded within charts. Our Lazy & Hedged Lazy Portfolios maintain the follow positions: EUM, EFZ, SH, SDS, BGZ, QID, SSG, PSQ, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, EWU, BWD, GXG, THD, AFK, BRAQ, CHIQ, TUR, & VNM.


The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell any security.  Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period.  Chart annotations aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at .

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.

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