The Euro's will meet twice next week to discuss their response to the debt crisis, including a plan to deploy $1.3 trillion. Talks speeded up on combining the European Union’s temporary and planned permanent rescue funds as of mid-2012, while scrapping a ceiling on bailout spending.
This is a tenuous and fluid situation and one that's very difficult to trade in. I had some emails yesterday regarding how to make money from the coming crisis and I will put something together over the weekend but that my be too late to take advantage if the talks fail. I'll just tell you what I'm doing. Using the bear ETF's you can short the banks (SKF or FAZ), Short the euro (EUO), short small and large caps (TZA, and BGZ) and shrot commodities (SMN) but i am only putting in about 15%, and rest in cash and if the stuff hits the fan you can pile on. If they find a temporary cure through printing then the physical metals will gain on that, so this is more or less a hedge against the gold and silver (ZSL DZZ).
The SPX looks terrible on a technical basis price below the down sloping 150 and 200dma, and the MACD also at the top of its range. We also have this volatile wedge range if you will and price is near the high end of that range with 1240 being the high. I think getting long right here is a mistake, and very risky because you don't know what Europe will do over the weekend. If things go badly we could be at 1100 very quickly, in about two days or so.
It will be interesting to see the COT reports to see what the commercial banks are doing in terms of positioning. They had gone bearish on the dollar and bullish on the euro and you see that spike and now there may be a bull flag forming and this is contrary to what I wrote yesterday. Very confusing market. Banking index is clearly showing the financial system is in trouble usually rising wedge in a long term down trend sucks new money in and rips your gut out, the problem with them is that they are so difficult to time. Just look at summer of 08 this pattern feel very familiar.
I took this from Dan Norcini's website, take a look at this informative article. It shows you how important the QE is for stocks:
Have a good weekend everyone.
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