Saturday, February 25, 2012

Does History Repeat Itself?

So far, 2012 seems to be a bullish start for equities. Great news!!!


Except for the fact that volumes have been at historical lows and short position covering has been occurring (not good for sustained bullish markets).



Where does this leave us? A market levitating because of central bank money-printing (too much money chasing too few assets), very low volumes (strong volume confirms bull/bear markets), and short covering ("don't fight the fed").

How long can this go on? I'm betting not for much longer, but it is an election year.

If the Fed launches another round of quantitative easing, the markets should go higher. But like sleeping pills, with every additional pill, the added effects are less than the one before it (and too many will produce very bad results).






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