The overall picture now enters what should be a different environment. The period typically between now and Memorial Day has selling pressure. We have not seen a down month in over 6 months and since the bonds finally had a 2 point correction on Friday the 3rd, which took 8 months to accomplish, I think the stocks should not be far behind. My complacency indicators I follow are reading the most bearish signs in years. The bonds reached our profit objective which demonstrates that patience and persistence will finally be rewarded especially in an overbought market place. After looking at the S&P 500 e-minis daily chart over the last month and you will see how this market has consecutive up days and then very sharp down days. As of Tuesday, the same pattern showed with 4 consecutive up days like we had when we reached 1593 prior. Then we saw a decline of over 50 S&P points within 2 days. Common sense needs to tell us that this market is ripe. By Wednesday the up move extended to just shy of 1630 which represented approximately a 50 point move in the S&P in 6 trading days. The market is definitely de-energized today as evidenced by the internals as we have seen more minus tick during the course of the day than we have seen recently. The Wednesday lows at 1617 became a very important short term threshold that needed to be closed below to end this rally.

Trading on Thursday was a distortion of significance. You who keep diaries need to make a special note that we saw the S&P and the bonds simultaneously at the day’s lows. This has completely introverted what has been the normal environment. The magnitude of this distortion is even more paramount because we know the Federal Reserve does asset purchases and still both markets registered lows. This could be a sign that the environment is changing drastically.

The bonds were the beauty queen of April. They are the ugly sister in May. We just completed 5 full points of correction in a one week period of time obliterating all the beauty of the last 4 weeks April. The bonds had a heavy seller which drove the bonds more than one point down without any bounce in early trading with extremely heavy volume. These bonds are more than injured, they might be chronically sick.

Friday morning Bernanke had a written prepared speech that he read to a Chicago meeting. The content of his speech sounded like a campaign Congressional oration. The substance was questionable as to its clarity even though he used the word many times, "transparency." It was also so interesting that he only took 3 questions and it was obvious that they were prepared in advance as he gave a prepared memorized response without hesitation. He is the politician. Why don’t we have a business man as the chief?