The major indexes (IWM, SPY, QQQ) all remain quite volatile. It has been a choppy market since mid-february (See figure 1). In this type of market I try and stay mostly in cash and take advantage of a swing trade set up if I see an opportunity. I prefer trading the long side, so that is what I try and focus on if I can find it. I get the feeling this market is going to take a little while to settle down. The SPY could head back down to the bottom if it's trading range at 126. Right now, it is not showing any evidence that the buyers have regained control. The longer term SPY chart (see figure 2) shows that we are still in an uptrend, but it has become choppy. I will be watching to see if the price action shows signs of trying to stabilize and the buyers show up.
Figure 1
Figure 2
There has been talk lately about the need to increase the debt ceiling. The president stated that America does not default on it's debt. You can default on your debt honestly (admit that you do not have the money) or dishonestly (print up some money, if you have the ability to do so). Fortunately for the Federal Government, they do have a printing press (see figure 3). This is a chart from the Federal Reserve Bank of St. Louis. It basically shows the monetary base of the US from about 1920 to present day. Notice how in 2009 the monetary base sky rockets up.
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