Bubble Debt and the Deficit……….with update
These two overhanging issues are the offset to the current predominate market player bottom fishing attitude. Bernanke talked about these issues yesterday and they will not go away easily. As we have outlined in blogs some months ago, attacking the deficit before people are back to work will insure a massive market crash. So a fine line is being followed. The next election will establish the direction, if the deficit hawks win big as some anticipate, stocks are headed much lower. In the meantime you can only be a buyer when stocks are cheap. They are not cheap now.
Update at 11:20 AM CDT
Goldman Sachs just took out the May 25 low. Also the 250 day moving average (approximately one year of trading days) for the China FXI ETF turned down on June 1, 2010. The bounce up the past two days are just a bounce towards that line. Prior significant turning points in that moving average were, turn down on 6/30/08, turn up on 9/4/09, and the current turn down on 6/1/10. The FXI daily peak was in November 2009.