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I fail to see how the US market can be plus/minus 4% outside normal trading hours, but it does show we are at a cross road. I could also very well be that I and my fellow bears need to eat some "humble pie".....
The long and short it remains:
Against my "model environment" I still need to be short, but if this close is up +25/35 points @ 22.15 European time the model may turn neutral again. (follow up 2nite or tomorrow)
but.... more importantly:
We all agree on the crisis is incoming - the difference is one of timing - and yes in trading timing is everything, but stay with me:
The believe in the political system + central bank is old, well-tested and should have highest probability - and a view we shared until very recently.
We are however concerned about Germany going it alone - in a synchronized world this does not fit ........
Also China is totally ignoring the calls for revaluation of their currency, which means the negative impact of globalisation continues, i.e: China is net saving, the G-20 net spending - and it should be the other way around due to average age of population.
Leave that aside. The two question, you and I need to ask ourselves are:
- Do you believe they(politicians+ bureacrats) got more ammunition to use to stablise these markets (or do you believe this is start of sovereign debt crisis) - I do.....but what and when?
- Will you stay with your model or not. Our model is very simplistic and has been on this blog several times, our 'Beta-model' remains short, for now, and yes (for now)
You know my answer to the above questions for now, but I have to admit a 40 points rally got me very nervous and as it is... into to the month-end rebalancing it has not been a good ride for me, so to some extent... I am already halfway-through the humble pie..........
Winston
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