Come on now, it is not news that the Leftist Syriza coming out of the left field threw a wrench into the Greek election. The uncertainty of it all, Pasok or Syriza, somehow doesn’t fade the market yesterday. Despite our conjecture of potential doom and gloom, the domino-effect of Greece exit of Euro-zone, and the various bearish scenarios that may come out of this election; market still went up Friday.
What does that tell you? Sometimes when market did not do what you (or we) expected it to do, that by itself is an important message. Seemed to me the market is brushing off this uncertainty because the market knows that one way or the other, the rest of the world is not going to let a small country like Greece ruins the stability of world economy.
What about the lesson from the failure of Lehman? Yeah, even I fell into the trap door using this example as a rebuttal argument. Now, I believe it is BECAUSE of the failure of Lehman that the financial centers around world learned an important lesson and are much more ready to handle any financial fall-out from Greece exit of the Euro-zone if that is the path being chose.
Think about this, the stock market, as a barometer, does NOT like uncertainty; it would fall hard last week if the world thought Greece is important enough to fuck the world economy up. Perhaps last year the world was not ready for Greece “situation”; but giving the last week stock market movement; the world may be ready for whatever may come from Greece this year.
Look at the weekly Dow Jones chart below, the volume for last week was 25% higher than the week before and last week was an up bar! If you ignore the outside noises and just look at the chart, it is as bullish as anyone will like it to be.
I’m glad I nibbled my way back in with 55% invested; this is close to the middle ground with a 5% bias on the upside. Regardless of how the market behave on Monday, I’ve no regret on my decision I made on Friday.
You see, it is not what we think that matter, it is what the price action says that does!
And since price action is the King in my book, I always follow my King.
Good Hunting!
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Nice post. No argument from me. And the best part is (I’m still uncomfortable starting a sentence with an and.), CNBC will have anothe Sunday night special, and a bunch of FX wussie MARKET MAKERS, WILL NOT BE MAKING MARKETS IN FOREX over the weekend. They sould all be fired.
A completely complete non event. I’ll still be watching the futures, trying to figure out what way to play the open, but I know it will only depend on the action, not what the talkin heads sez.
“…I know it will only depend on the action”
Sometimes even the price action itself is not so clear (range bound; or back&forth like a yoyo); it is still truer than our thinking head…
Thanks for the comment.
Well said. I’ve been arguing with a fellow FX trader friend of mine. He’s been hell bent on what various “experts” are babbling about on the TV. He’s also missing out on this run up, and will probably hold his short position far far too long because he thinks it can only happen the way he thinks it will happen. Meanwhile, i’m long into this election with a well placed stop above entry.
“…because he thinks it can only happen the way he thinks it will happen.”
Even a broken clock is correct twice a day for a minute; and because of this one minute; your friend may become the prisoner of his own mind.
That is why it is always much easier to put your trust into price action beyond your mind. This way, you don’t become a prisoner of your own illusion.
Thanks for sharing.
The price action is always key. But the options market drives stock prices these days. Way to fucking quiet ahead of the Greektards. There is a massive banana peel somewhere.
Been a bull for the last couple weeks and still positioned that way. Just hate the set up for monday and the entire upcoming week.
Uncertainty is a bitch but we have probability on our side. And it is good to know that we have 100% control of own action giving the market next move. Hold, sell, buy, or flat; pick one that will either maximize your profit or minimize your loss. It is when one is frozen to market next move that one becomes “toasted”.
Thanks for your comment.
Two points:
The market has the attention span of a one year old.
History might not repeat, but it often rhymes.
I remember 2008 and Lehman vividly. Paulson’s Bazooka, Emergency rate cuts, Central bank swap lines. Every ‘fix’ and ‘save’ produced a vicious rally that would just get sold off harder within a week or two.
Point being, the structural debt overhang problems encumbering the west have been playing out for years and are not going to be resolved this weekend.
To take the other side of your argument, I believe that central banks certainly learned how to hit the print button to put out the 2008 fire. But is that really the right lesson they needed to learn? You would hope the real lesson there was that deregulation and artificially low interest rates led to unsustainable credit expansion in the form of home loans to people that couldn’t fucking pay them back. With bailouts now ingrained as official central banking policy around the globe, it is only a matter of time until the currency and bond markets along with their attached countries and economies suffer severe dislocations.
And just like every emergency, nobody is going to see it coming but it will be pretty obvious when you examine it in the mirror.
The last time June follow through produced a rip roaring bull market was 1992 and only two summertime buy signals have led to significant gains in the past 12 years.
But as far as the market is concerned, yes, price action is king. If we are going to break out and run for multi year highs, I would desperately like to see stocks like AAPl, PCLN and CMG leading higher instead of MO, BUD and Bio-Tech.
In any case, I will remain almost totally in cash until a trend sets up.
“The market has the attention span of a one year old.”
And this is another reason to follow the price action. As we all know the one year old will wander all over the place so it is pointless to guess which way the one year old will go.
Only then we will be on board when this one year old become a teenager who can run for miles in one direction.
All your points are valid but the market will do whatever it does. And yes, whipsaw is cost of business and so is the big bonus from windfall.
Thanks for the comment.