Germans and Republicans….Financial Surprise Brewing
I am almost afraid to say what I am going to say today, but there actually is a case, albeit a weak case, to be bullish on the stock market. The weak case that it is built around is the chart of the XLF (financial) ETF and a potential head and shoulders formation for a short-term bull market (18 months). If the August 23 low of 11.81 holds and the September 1 high of 13.48 is taken out, we are a go to the upside. The good thing is that you don’t have to risk too much and if you can get quick execution you can just wait and follow the breakout, up or down becasue if the Ausgust 23 low is taken out, we have a double dip in the making.
Two factors weigh heavily on an upside move, the Germans in Europe and the Republicans in America. Both groups have played a game over the past two years of being publicly willing to bring down the world economy if they don’t get their way. Now they are backed into a corner, is more power and a depression going to be their answer, or are they going to join in and help rebuild the world economies. That is the question and you can take advantage of their decision, up or down.
The rolling over Gold market is also a part of of the above scenario.