Virtually all bear markets in this country's modern history have been preceded by Fed interest rate tightenings. [...]
Today, there's not even a hint of Federal Reserve rate hikes nor of significant liquidity draining. [...]
This kind of support from the Fed makes it unlikely that the current correction will turn into any kind of sustained bear market for stocks. The Fed would likely reinstate its QE [Quantitative Easing] program if stocks declined too sharply. Bernanke told Congress last month that there was nothing that says the Fed couldn't buy more mortgage-backed securities if conditions warranted. Therefore, even though I'm expecting this downturn to continue for a while, I don't regard the selloff as a great short selling opportunity, unlike what I had foreseen in the late 1990s-2000 and again in 2007 when interest rates were hiked.
~ Fred Hickey, The High-Tech Strategist, May 5, 2010
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