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So....what now? How big would Italy's rescue package have to be, and is there any entity that could swing it besides the US Federal Reserve?
all i have to say after todays action is f*ck.
i was hoping once we got out of the bear flag volatility would settle down some with a steady rise of the major indices up over the 5/11 highs. but obviously the bad news is pervasive with the sovereign debt problems in Europe getting worse. such is the hazard of investing and i hope anyone following my advice didn't get hurt too bad today.
seriously, all i'm trying to do here is help everyone along with what i see in the markets. i'm not naive enough to pump stocks hoping that the few of you here who might follow my advice would make any difference in market action. what i say here is what i truly believe and i'm putting my money where my mouth is so you can take comfort knowing i got stuffed good today.
having said all that i still think we're going up and will clear the 5/11 highs. 10/4 represented a confluence of cycle bottoms from a seasonal, intermediate and short term basis and sentiment was at lows. short interest was up and everyone was expecting wave 3 down. most of the year had been negative from May. when we did a headfake down out of the flag with a reversal my thinking changed. the UST double top also helped. then we get the best one month rally since 1976 and i think that was important. granted it takes balls to invest in this market based on the technicals but i think that the amount of fundamental variables at this point cannot be measured in any meaningful transparent way to determine exactly which direction we're headed.
i also think that we could be at a long term juncture where sovereign debt is being rejected in favor of equity. i've said throughout this thread that gov't debt acts like a black hole sucking productive capital into it at the expense of the private sector. guys like Gary Shilling have made a fortune investing in UST's for 30 f*cking years. this can't continue. if this mentality reverses, and i think it is, then this should be bullish for stocks as this would align well with my cycle work. stocks have gone nowhere for a decade and i think the 2 remaining biggest bulls, UST's and pm's have, or nearly have, begun their selloff IMO. don't forget that this sovereign debt selloff continued today but instead of the fiat being plowed immediately into stocks it went into USD's and UST's. but as soon as tomorrow investors could then choose to plow these same USD's into stocks. as long as we don't dive back down into the bear flag i'm still bullish.
when you invest the way i am with cycle work you have to think in terms of weeks/months/years despite what happened today. if we get over the 5/11 highs i will be looking for some significant divergences that would represent the beginning of a failure. for us to get over those highs i am also looking for the $DXY to dive below the 3/08 lows. these are HUGE and risky calls on my part so don't forget you get what you pay for and children shouldn't try this at home. if i'm right tho the payoff will be huge as well. don't forget that bull markets do their best to try and shake you off.
don't forget that at this pt all it takes is for the ECB to whisper that it will start monetizing bonds for the market to ramp like a mofo to kill the shorts. if they don't inflate the market will blow up and we'll enter wave 3 down from 2008 and the 2nd Great Depression will begin as S3052 is calling for.
