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Friday, August 19, 2011

Market Thought... technicals

Without clarity from the Europeans, any rally here should be taken with a grain of salt. (Without question I see awesome opportunities here, but also see continued volatility with strong EU action.)

The market may very well rally to the 5 or 14SMA on the daily, then find resistance.

On the bright side, regardless of what people think (how valuations do not matter) and what volatility the EU is allowing to take place, the truth is, valuations do matter. There is always a level to which people will step in as too much is discounted. (Google's level was below $500, money came in quick this morning as it opened below 500.)

The only thing that will ease the volatility and give equity markets a sustained and stable move from current levels is if clarity from the EU is given. IMO, I would like to see something drastic, maybe devalue the Euro or get the Euro-bond in place by the end of the year.  At this point, I will take anything, even if it gives the markets a short-term shock, to get this crap out of the way.

Because I am expecting some level of 'shock' from the EU action that needs to get done, I will always have a small level of SPY protection in play.

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