Hi Dale:
This thread has certainly become bullish. In fact there seem to be quite a few long-term bulls as well. After Friday's action I understand it. The market was looking for an excuse to go up despite some pretty bad news in the world. That is a very bullish sign (typical at turn-arounds), very different from some of those manufactured rallies we had Thursday and the previous Friday.
Before joining the bullish camp short-term, I will be looking at two main factors: Clinton and Japan (and one should probably not ignore Brazil).
Clinton
He is unlikely to resign, but impeachment proceedings are likely: intermediate-term negative for the market, but unlikely to cause big moves except possibly this week. This week's reaction could be either very positive or very negative depending on the public reaction and the politicians' responses. There is an interesting dichotomy. Polls polling the total population, radio shows are overwhelmingly against impeachment, while the MSNBC poll still has more than 70 % people saying that he has to go. Of course, the first group is dominated by people who don't keep themselves very informed and probably contains a larger fraction of non-voters than the second group of people, an important consideration for politicians.
My impression at the moment is that this could be a big positive Monday/Tuesday
Japan
Japan had a real bombshell after the market closed. GDP fell by 3.3% (annual basis) and the Nikkei fell already below 14000 without anticipating such disaster. If that does not cause a 10%+ crash, I don't know what ever would.
So if Japan does not crash and the Clinton sentiment is not too negative, I will go aggressively short-term long Monday morning (fortunately we will know before the market opens). It could be more than 5% this week.
If Japan crashes, but Clinton sentiment remains positive: could be a roller coaster, no action from me.
If Japan crashes, Clinton sentiment turns negative: BK
Good trading,
Phil |
