Market Bounce is Because of China Comments?
The Yahoo finance top story is about yesterday's "Financial Times report that China was considering cutting its exposure to European debt. That would have signaled that China didn't think Europe would be able to contain the crisis. The agency that manages China's $2.5 trillion in foreign reserves denied the report."
Their take is that this denial caused the bounce today. As though a sovereign wealth fund would tell you in advance how and when they were planning to get out of a huge position in garbage European sovereign debt. As cynical as I am about other fund managers, I don't think they are that stupid.
The market bounced because it was ready to bounce, as I was warning all week. We were seeing high levels of put buying and the market was oversold.
This bounce could continue, but it is going to set up great short selling opportunities if it does.
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1 comment:
I've actually found the contemporary market action of the last two weeks to be entirely predictable and perhaps working the most logically and consistently it has in over a year. Yet countless traders and investors seem incredibly perplexed by this current period. It reinforces my belief that we are witnessing a short-term directional change in the markets-- investors tend to have no trouble recognizing a trend when it is clear and in force for a period of time, but the transition period from one trend to another tends to never be recognized as such (instead, it appears as this mysterious "hiccup" in the existing trend) and therefore leaves numerous investors flummoxed.
They lose their shirts shortly thereafter.
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