Courtesy of World of Finance
Right now the whole country is fixated on the debt ceiling drama. Why not include Paris Hilton for some reliefs and oomph while we are at it. It seems Mr. Boehner is now the most powerful man on earth, holding the fate of the world in his hand. As far as soap operas go, it cannot get any better. We forget why we are here in the 1st place. I am not going to start a debate who is right or who is wrong, because both these parties are the two sides of a counterfeit coin. Whichever side you choose, it is still fake, fake, fake and fake.
As I said earlier, I think the market will huff and puff for a day or two before it shoots up. [ed. note: BB wrote this on the weekend] I shall be waiting to “buy the f*****g dip”. Do not get confused by my call when I say that stock markets are not going to fall yet. I am bullish in the very short term but super bearish in the intermediate and long term. Why I think the stock markets will go up in near term? Apart from many proprietary indicators and formulae, I also try to think like the Boyzs.
Let us look at the following chart. It is a correlation between SPX and Fed’s Balance Sheet. [click on chart to enlarge]
As you can see, the rise in stock price is the direct result of liquidity injected by the Fed. So now that Fed is no longer pumping money into the system, why it is still going up? Elementary my dear Watson! Because the Boyzs want “get everyone go long, then we dump them”.
Look at the Seinfeld clip again. They are good! I mean the people running the fake rally. This rally will run till all the money sitting in the sideline has been sucked in and all late comer bulls are fully invested. Do we run away from this rally? If you are a long term investor, then yes, you should probably stay away from this rally. But if you are a trader, you might as well enjoy this ride and make money. That is the best revenge you can take.
See Also:
Debt Ceiling Monday.
The market in all possibilities will start lower and may slowly work its way up. The world is not coming to an end, yet.
P.S.
I posted the above before the market open. At the opening SPX dived down to 1330 level and has been clawing back since then. NDX is already in positive territory. Although half the day is still to come and many things may happen in the next 3/4 hours, markets are following the script, so far. I have taken three trades on the long side. Just wanted to say, I walk the walk.
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