Saturday, August 4, 2012

Are We There Yet?

I remember writing somewhat similar headline around the same time last year. More things change more they remain the same. So here we are again, oscillating between breaking higher on hope and promise or breaking down on Euro worries and Global slowdown. The Central Bankers have not yet showed up with the promised money to propel the market to far away galaxy. But that has not exactly stopped the the bulls. We are almost near the high of the year. Will we break it and reach new highs?

There are many reasons for the market to march higher. Almost 50% of the S&P 500 companies have exceeded the earnings forecast. But the bar was set low to start with. With growth in real earning being negative, I do not see what will propel the economy higher. Where the growth will come from if people do not have money to spend in the 1st place?

But we are not here to discuss economics. There are many intelligent folks out there who do a better job of explaining the economics. I simply to try to figure out where the market will go next. Try to read the minds of  TPTB as to what they have in store for the sheeples. It is like reading the tea leave and pray that it works out  as I see it.

So far I have been lucky and I hope that the luck runs a bit further. The formula is to reduce risk and not fall for the temptation that our masters are dangling before us. Last week I expected the action, rather the lack of action from the Fed and ECB. I also saw the immediate market reaction and what is coming next. It is like playing a game of chess and trying to read the mind of your opponent. Only here we cannot see the opponent but he is very much there, in many shape and form, waiting to rob you of your money.

In " Waiting for Mario" I said I will be more comfortable to short if we reach 1400 level. We are almost there. I think even now it is OK to start shorting with a very tight stop, but I want to wait few more days to see if they can push it past 1400. Logically they should make every last effort to cross that landmark. That will convince many that a new bull market is here and jump in. Now that they have killed the bears, their next target is to bring in more bulls to the slaughter house. So I would prefer  to wait a little while more but I think the game is up.

I was looking for the correction by 1st week of August but it got pushed down the time line by factors like FOMC and ECB. Now there is nothing much between earth and hope for at least till  Jackson Hole when Ben will bring in QE3.

So play it safe. Do not chase the bus. And above all, remember, even if we miss this opportunity, there will be many more to come. Markets always go up and come down. But once our capital is gone, it will be very difficult to get it back. I do not have much of fancy charts to show you but I can share what I have learned by mistakes and all the hard punches the market has given me over years. Even if it benefits one person, I will consider that as mission accomplished.

Thank you for sharing my thoughts. Please share it with your friends and if this blog has benefited you in any way, please invite others to join the readership. Right now, that is my only motivation. Have a wonderful weekend folks.