On the shorter term time frame (see figure 1) the SPY is showing some signs of stability. If the SPY can hold 118 and move above 119 I may consider a smaller than normal position size swing trade. I still think that overall big picture risk in this environment is high (see figure 2). This market has had a huge fearful sell off and despite the bounce last week I would still not be surprised by a volatile trading environment. I think that testing last weeks lows is still not out of the question. If the price action shows a continued bounce (SPY moves above 119), I will be watching any long swing trades I initiate closely. I feel that any bounce (if it materializes) will be short term and I do not have high expectations. Overall, based on what I have seen after past fearful sell offs, the market will take some time to heal. There could be some short term bounces, but those are not my preferred trades.
Figure 1.
Figure 2.
Some thoughts on the bigger picture:
Alan Greenspan, in a recent interview, assured the American Public that the US can not default on it's debt because the US can always print money. He is correct, the US will not default, since the US has a print press for it's dollars. The interview would have been more worthwhile if he addressed why printing money is an appropriate way to service debt? What kind of effects does inflation of the money supply have on the economy? Does he feel that demand for dollars will keep up with inflation of the money supply?
0 comments:
Post a Comment