1. Timing looks good for wave 4 up starting tomorrow likely as I have no doubt with the new EU strategy only to release funds to Greece after they agree on the measures ( privatization, austerity). The release of the pending 12 bil payment from the last bailout will push the confidence vote the right way. The confidence vote pass through, should initially spark wave 4 up to the 1290-1300 level before the actual bailout 2.0 agreement gets messed up again and wave 5 down is initiated within 10 days I assume as we get a real ugly Solar eclipse on 1st July.
The sentiment has arrived at quite bearish levels and should soon trigger a bigger rally even from lower levels once 2.0 is finally agreed upon. The Greece are aware of the global implications of their bailout and are playing quite a bargain game before they will at some point default anyway. On the other hand Obama with or against the Reps could take out a lot of bad air as soon as they came to an understanding about the debt ceiling issue which is even a bigger problem going forward.
So far we are following he 100 year playbook as we repeat market wise quite the performance of 1907-1910 with a little delay by a few months – the total correction back then was in the magnitude of 25% so we have only played out 1/3 of the downside target so far. Yet we have reached very oversold levels and will have 2 rallies short term one is due in June part of window dressing and technical aspects once Greece seems to be settled. The bigger one comes after new lows mid July after a real resolution of Greece plus the deeply oversold market by then will give good reason for some value hunters to get the IPO market going again.
|MONDAY, JUNE 13, 2011|
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