Market snapped back from oversold condition, BUT how far will this go!!! Euro-zone crisis is not resolved, the only thing that changed was delay in S&P ratings agency review and downgrades which were to be announced last week. Most likely we will hear from them in January. Although, it may seem like market is in rally mode but be cautious as this is festive season and volumes are lower than normal....
Market seems to make several attempts to rally but after few days, the steam is lost and we are back to square 1. Euro-zone crisis is not easy to resolve and as every day passes, investors are loosing confidence. Hence we are seeing slow and contained selling. What does it mean for us!!!
Its apparent by now that after every step Euro-zone leaders are taking, market roars higher for few days ONLY to give back all the gains. In short how long will this game continue before market breaks down decisively & significantly!!! Well, why should we worry? We have a technique to follow and rules to abide by which will ensure our limited losses and will let us ride the gains, SIMPLE enough!!!
Last week we saw market had another single day HUGE rally, why? Well, federal banks of 6 nations came together and decided to support and provide liquidity for Euro-zone. How should we read this news!!! Something must be drastically wrong! or may be a BIG European bank was on the brinks of collapse... which made things so critical that federal banks of several nations had to come to an immediate decision as temporary bandage. Market took this opportunity and rallied but is this a BULL trap or start of another REAL rally!!!
NOTE: For entire month of December our weekly blog post will be concise and brief.
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