THE 4 CURRENT ISSUES OF THE MARKET THAT SHOULD BE KEEPING TRADERS UP AT NIGHT
Here are a few items that traders need to keep in mind as we move through December:
- Yes, it's a bullish month. However, keep in mind that is the back end of the month that is bullish. The front end (up to the 20th roughly) isn't all that spectacular. With that said, it should become a glaring problem that we are now sitting at such lofty levels during a time period that has typically led to mediocre results. How will the market prepare itself for the buying frenzy that is the final two weeks of the year? A month long run, with an acceleration into month end seems a little too overenthusiastic given current circumstances.
- Why were the metals so weak today? Gold especially has become a leading indicator of sorts for the market. While the S&P 500 kept moving down through November 28th, gold was basing from the 22nd, indicating that the equity world was overreacting. While everybody was running for their lives in fear of the S&P breaking 1000 in early October, gold has already been basing since the 26th of September and didn't seem the least bit worried. Now gold is rolling over, well ahead of equities and well below its October/November highs. A firm negative.
- Treasuries remain much stronger than I expected. If we are about to get a year end rally, why isn't the big money moving away from their fixed income exposure? If Europe is on the verge of a real solution, why aren't large institutions willing to put risk back on?
- If Europe is about to find a solution through this most recent summit/agreement, why isn't the Euro front running the news in anticipation? Are you telling me that one of the most liquid markets, with some of the most deep pocketed participants aren't interested in profiting from such an event? Instead the Euro is sitting near its yearly low at 1.32 just inviting buyers in and keeping away sellers that think a solution will cause a pop up to 1.36. Markets pin themselves to the ground for a reason. It's typically to avoid the bus they see coming.
