It's the last day of the month and what a terrible trading month it has been for most investors! The month of May saw all the major indices turn negative based on our Trade Triangle Technology. This is not something to be taken lightly, as it foretells of the future trends for all of the major indices.
We have come to the end of the road and the can cannot be kicked any further. It is the moment of truth for investors and the moment of truth for politicians worldwide. It is the moment no one wants to face.
Does anybody think that things are going to get better in Europe? The equity markets are in bear trends, interest rates are at record lows in the US, and funding is becoming more problematic for some European countries. So, is China going to save the world? China has to export to other countries and those other countries are moving into a recession. I wouldn't look for China to save the world.
So what's an investor to do?
The reality is that we could be seeing some of the best trading opportunities in quite some time. As far as the general equity markets are concerned, you want to be on the sidelines or short based on our Trade Triangle Technology.
Looking at all the markets, it would appear to this observer that we are headed into a deflationary scenario where products and services just become less expensive.
I also believe that Ben Bernanke has got it wrong. Yes, he was a student of the Great Depression, but times and the world have changed since then. It's not just the US anymore, it's all the European countries and overseas markets also in bear markets. Europe is tied together with the idea of having a centralized currency. I think as we move forward, more and more countries will want to regain their independence and their heritage and move away from the Euro.
As they say in New Orleans, "let the good times roll." Well, maybe the "good times" have come to an end for many of the socialist countries in Europe.
Let me finish by saying this, change equals opportunity and there are going to be some great opportunities for the well-informed trader and investor.
What are your thoughts?
Feel free to leave a comment on what you think is going to happen in the future.
President of INO.com and co-founder of MarketClub
2 thoughts on “I wouldn't look for China to save the world”
This is not 1929 - you got that right! They didn't have computers trading each other using advanced algorithms. They didn't have huge oil, gold, commodity, currency and options markets. And they didn't have 2.6 billion people in India and China. I could go on!
While we deal with the technical aspect of the market here, I believe that the fundamental and political aspects of the market and the world in general must be considered. It seems to me that we have some people, people in influential positions, making some incredibly bad decisions. Yes, I have found some nice day trades throughout all of the economic upheaval. But as individual traders we can only take care of ourselves.
What about the rest of the world? It wasn't all that long ago when Angela Merkel warned that the financial crisis could lead to a world war. I seriously hope that cooler heads will prevail but as was noted above, Ben Bernanke is a student of the Depression. That was a long time ago. If 1920s and 1930s solutions are applied to this situation, which seems to be the case, it will be a long time before we see the proverbial "light at the end of the tunnel".
Happy trading everybody.
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