Rich Asians Will Save Us All
- Posted by DynamicHedge
- on May 23rd, 2012
This post deserves much more attention but I’m working under some heavy time constraints this week.
Germany has reiterated their stance euro-bonds by issuing a firm NO despite recommendations from the IMF and OECD. Something could change but besides a certain rich Asian “saving” nation stepping in or Greece being made an honorary gulf state it’s not looking good.
Despite posturing of those claiming to know what’s going on there’s NO WAY to get a logical read on a a crisis like this. The best you can do is draw a line in the sand. My thesis of the Bernanke pattern still holds. Yes, volatility has intensified but I’ve reviewed the data and can’t find much else that fits. This may not a reason to get super bullish (yet) but it is enough reason for me not to get caught up in any apocalypse talk. That said, anything can happen so use the $SSEC as your barometer.
The Shanghai composite is much more sensitive than the $SPX lately and one of the world indices not making new lows. It has previously been an excellent tell on the $SPX and should give you a days worth of warning if the situation in Europe starts to deteriorate further. If you’re bullish, pick your swing low ($2344 or $2252) and use that as your pivot for the summer months. If the $2344 area holds on the $SSEC, the $SPX could very well swallow the bears whole and make new highs. If both pivots break we are in for some history making and all bets are off.
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DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
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