Goldman Doesn’t Know What’s Next Either


Author Larry Berman

Posted: 3 July 2012 re-posted from etfcm

It should be no surprise that the market jumped like a rocket and stopped the month and the quarter end rally right at the key retracement resistance of 1363, as well as the previous June high. This should only serve to prove the point we raised last week which is Goldman (or the person that made the now stopped out market call) does not know what is going to happen next either.

I think we can all agree that the infrastructure of the global capital markets is weak at best. They can patch it up and maybe even fix it with massive money printing [said with an Austrian accent a la Dr. Marc Faber] over very long periods of time. But as Japan has aptly demonstrated, the longer-term QE does not work to fix the problem.

So the markets are about assessing the trading risks looking out for several weeks to months, and it appears that for now, the EU has come up with another band-aid. But also trust that Europe is not fixed and there is much more to go in the saga. Our trading bias is to lighten up positions into earnings season and if the market breaks out, stops should be trailed up to protect the gains.

 

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