Wall Street Looks for a Villain
Was it a “Fat Finger”, was it a rogue computer program, was it a trader out of control ? All these possibilities are too complex for this situation. To me it looks like everyone got on the same side of the boat and it tipped over. Regardless of the trend program that one follows, it probably gave a sell signal between 1140 and 1160 on the S&P. No one was left to buy for a moment.
Now everyone thinks that they have found the solution, it is the Euro Zone rescue plan. No doubt this is a factor but reality is that there is some good and bad news out there at the moment. First the good news, the S&P is not going down to test 666 for a few years, the bad news, it will see 1017 by the middle of the summer before a fall rebound. Today we are seeing an upward reaction to the resistance levels around 1150 but the fact remains that the world is worth 30 percent less than it was in July 2007 and things don’t heal and hold this fast. We are trading accordingly.