There is plenty to fear in the markets. Not only are the debt concerns of countries like Spain, Portugal, Greece, Ireland and Italy a worry, but the financial institutions that hold that debt are an even bigger worry. There are so many bad loans out there which would suggest that many of the biggest banks around the world could be essentially insolvent. That wouldn't be good news for the overall markets.
Many analysts are projecting lower lows are ahead of us and traders around the globe are fearful based on the rapid decline the markets experienced in early August. Another factor that keeps fear in the air is that the market hasn't seen this much selling since the crash in 2008.
All of these signs make me a go-against-the-grain buyer down here in the vicinity of 1100 ES. I think the odds of a reversal back upwards in the current trading range of 1100-1200 (ES) is more likely than an unrelenting continuation down. That being said, I won't defend any long positions if the 1080-1100 (ES) support does not hold. In the longer term I think a move down to 1000-1020 ES is very possible. For now though, I am looking for buying opportunities.
The big event to watch for this week will be Ben Bernanke's speech this Friday at the Fed's annual retreat to Jackson Hole, Wyoming.
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