Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your 1 p.m. market update for Tuesday, the 9th of August.
Will the Fed come to the rescue of the market?
Everything is possible, it just depends on how stupid the Fed wants to be. In the study of economic history and capitalism in America there are periods of maximum euphoria and maximum depression. You almost can't have one without the other, that is one of the ways capitalism works. We've gone through a period of time that we've seen unprecedented euphoria and debt put on America's chalkboard. And we have witnessed millions of Americans faking their way to happiness using credit cards.
As hard as it is for everyone to accept that the good times are over, it is now time for what everyone doesn't want... Economic pain. You may want to look at an earlier posting, that I posted in 2008 on cycles in American capitalism. It holds true now just as it held true 100 years ago.
The next shoe to drop will be interest rates. Interest rates have only one direction to go, and that is to the upside. This a fact of the marketplace and probably more pain than most people want to endure.
The potential for the equity markets to continue to erode and drift lower is very high, in my opinion. To temper that thought I'm going to say up front that I'm a trader, not an investor. Right now, the days of buy and hold are over and will not resume for many years to come.(See 100 years of capitalism). If I am right, the equity trends will remain negative with minor counter trend rallies. We could see the equity markets on the defensive until right before the 2012 elections. Only time will tell... Continue reading "Everything Is Possible"
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