I know it is kind of boring to read the same thing. “Hold on”, “don’t do anything”, “this market is not for investors” so on and so forth. But what else can I say. If we got excited yesterday and jumped in, we would have been very sad today. Even if there is bounce on the way, a better entry is always welcome. So where in the grand scheme of things we are right now? It is just my guess and please do your due diligence, but if we compare the price action of last year, I think we are here:
The areas circled.
Here is an interesting tit bit from Bespoke
Ya, ya I know I know. SPX is going to 1250 1st before any bounce or so they say. The funny thing is when everyone and their grandma agree on same thing, opposite happens. The sentiment is as bearish as it can get. We are almost getting to the point where we are getting bored and develop fatigue about news from Europe. There is no end of bad news from Europe and about Europe. But I tend to agree with Nassim Taleb. Forget Europe, it is USA which is a bigger problem. http://www.bloomberg.com/news/2012-05-30/taleb-says-euro-breakup-not-a-big-deal-as-u-s-scariest.html
Remember my post about the giant Ponzi scheme few days back?
Coming back to the markets here at Ponzistan, we might see a lower low intraday tomorrow but more likely than not, we will also see a bounce. The FOMC is still three weeks away and it does not serve much purpose to tank the market too much now. The Chairman will not be able to take any action. Technically speaking, now is the right time for a bounce. Can the market go lower from here? Sure it can. 200 DMA of SPX is at 1283 and would be a good support level. That is about 2% below from here. But the potential for upside is more at this point. As and when the equities go up, commodities will also go up, including gold. However, I would still stay away from going long gold at this point of time.
I am not suggesting that you start buying tomorrow. All I am saying is: maybe we should not jump on the short side now and just stay in cash and see how things develop. I know, again the same old suggestion. Boring.
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