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Friday, May 7, 2010

Market Volatility returns

I got quite a few emails/comments from people on the market volatility. I didn't get too excited about the market actions today. It was a bit surprising to see the market plunge so suddenly.

The markets are fragile, there is not a huge demand to buy stocks at these prices. Anything goes wrong and the floor evaporates causing a freefall. Todays market action was blamed on problems in Greece and computer trading.

Start of LAST year, and re-iterated this year, that we should see countries start to collapse, following Iceland's example. I fully expect as America deepens the debt it has to face, that other smaller countries will be thrown under the bus. In the process the US looks better as can been seen in the US dollar valuation skyrocketing recently. But in the end, the US is in a similar position, it's just that I expect the US to have violence and political turmoil closer to 2012-2013. In my opinion Marshall law in some of the poor areas of the US is all but certain to happen.

For now, who knows where the market goes. I expect actually the markets to rally back starting sometime in the few days or week back towards S&P500 at 1,200. Then the media will pat America on it's back that the US is better off than every one else. Once we start patting ourselves on the back, I am going to get ready to re-enter shorts with the next major fall.

Today could be start of downturn, no one knows, but I actually think the market will hold here and rally.

For now, here are the charts of today's action, and it isn't good. From a charting perspective the market looks like it is falling apart here and now. And it may be. But for now, I'll hold my shorts, hold my gold miners and wait. As I stated so many times in the last few weeks, make sure you have stops in, and cash in the near term is king.

Keep in mind, people are still being fired at a rate of 100K-400K every two weeks, states are insolvent and shutting schools early this year. Countries are failing, such as Greece, Iceland, and eventually Spain, Italy, etc. This is not an ideal time to invest in the market. Not a bad time to buy land, stock in food companies, etc. Be nimble, and read my post on long term investing.

At the end is Peter Schiff making somewhat similar comments as to this entry. I listened to him AFTER I wrote above. Good to see Mr. Schiff and me on the same page. :)

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