Thursday 1 May 2014

Will it break?

There seems to be no end to what a wall of money can do. The market continues relentlessly upward.

I thought the upward push might break and have had another go at shorting the market using contra ETFs. Another failure. But this time I took such a small position that I can hold on for a while to see if I am right after all. I find it hard to believe that the market can hold out against the slow ending of QE. It will only take some unexpected shock to shake out all those margin traders. 



Question is: where will that shock come from? By definition it has to be unexpected. The Syrian outrage is doing nothing to hurt sentiment. The markets seem equally indifferent to the Ukraine stand off. That is developing much as I described a couple of weeks ago. Putin is pushing his luck to see how far he will be allowed to go. And the Americans have moved their troops forward to show him where he has to stop. But he can gain a fair bit of territory before he encounters serious resistance.

My guess is that some outrage in the Middle East or an unexpected bankruptcy or even a shock profit warning by a major business could be the trigger for the pull back that has to come.

If and when this happens I shall be ready to take advantage. In the mean time the big risk I face is that I am wrong and I should have been playing the market to the upside all along. 

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