Getting Tired Of This Seesaw? - June14, 2012

We all know and see that the markets are frozen inside tight trading ranges waiting for the next big move catalyst. I think that Sunday’s Greek election results are already toasted and baked in whatever the actual outcome cake might be. The only real potential market mover event on the horizon currently is next Wednesday’s FOMC policy statement. During democrat Presidential election years, the Fed always made every reasonable effort to launch market boosting maneuvers in June, knowing that most investors are asleep or away in July/August while a September bullish announcement is too late for a sure bull market perception by voters for the November election agenda. Then, obviously, the market can become uglier again after the Presidential election deadline. This time could be different of course, but I doubt it. If the much awaited end-of-year rally is to succeed, it needs first to breakout soon out of the bottoming market process with a strong follow-through day and next Wednesday looks like the most favorable circumstances especially if the market tanks first after the Greek election results. In case of a disappointing Wednesday’s Fed statement, the next big move will likely be a freefall for the price of all assets instead.

In this wait-and-see, news headlines dependent backdrop, I think that no mechanical system can reliably build tradable expectations before the start of the next big move. My own personal hunches and gut feelings tend to be much influenced by the daily noises. So, In the meantime, I prefer to stay in cash, stay fresh and prepare to jump early in that next express train rather than exhausting my mental and financial capital with daily seesawing omnibuses.
Billy


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Your comment is interesting in light of the fact that all of the Republican Presidential candidates stated openly that they would fire Bernanke if elected.

Simple self interest on his part would favor whatever bullish action he can pull out of his hat next week, regardless of the consequences.