Transcendental Market Truths:
The Market:
Stocks tumbled yesterday as the reality of the global sovereign debt crisis continues to knock on the door. Greece has not been bailed out, not by a long shot. And, officials cannot claim to bail it out for fear of violating the fragile treaties which bind the euro together. Indeed, even talk of throwing Greece out of the union would generate fears that the other PIGS would end up in the same destitute club, causing a run on banks throughout those countries (as it has in Greece). Bond interest rates are soaring in the Eurozone as investors realize that default is the ultimate destination for those countries which do not have an export surplus. Not every country can have a trade surplus like Germany, and the flaw in the Eurozone is that while it has a single currency, it does not have a single fiscal system. Right now, that conflict is tearing at the core of the currency, much to my delight, of course (I'm short the Euro, long the Dollar Index).
NYSE Composite:
The Advance-Decline Oscillator for the NYSE market (all stocks, ETFs, bonds, etc,) is approaching the zero line and that could be a place where the market bounces and heads up for a final high around the 11th of May.
Other indicators (T-Theory) point to the 20th.
The herd is going to buy the dip with both hands. It's just in their nature. But, of course, that's exactly how tops are made, with all the bears throwing in the towel and buying to cover their short positions. At exactly the right time to be selling the market short, they will be buying to staunch the pain.
Gold:
In Elliott-terms, this is a B-wave rally, but the profits are just as good as an impulse. At some point, it will end, but not quite yet. It's bullish that Gold can rally alongside its nemesis, the US Dollar. |
