Expect more when the Debt Deal is announced. Expect new highs for the Dow ... maybe briefly.
Harry Reid says glad markets closed Monday
- Thread starter silk
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In the end the game changer to the downside for the US is if it is actually late on an interest or principal payment on any of its debt. Almost no one expects that to happen so almost everyone expects a deal that at least kicks it down the road.
It is not every day that nearly everyone thinks they are looking at a sure thing of this magnitude. Does that mean the deal itself (as opposed to the expectation of one) pushes it higher? I suspect it does in the short term but who knows. What I do know, at least to the extent that anyone can KNOW anything, is that the US is not missing a payment on our public debt this year.
It is not every day that nearly everyone thinks they are looking at a sure thing of this magnitude. Does that mean the deal itself (as opposed to the expectation of one) pushes it higher? I suspect it does in the short term but who knows. What I do know, at least to the extent that anyone can KNOW anything, is that the US is not missing a payment on our public debt this year.
Keep in mind the psychology of many investors is that once this debt ceiling fiasco passes there are no headwinds in the near term to keep the market from going up. Whether its true or not will remain to be seen.
But we've seen this market "float up" day in and day out for years on nothing... so 55 pts in a few days on nothing isnt anything new i wont be surprised if we go up a lot more on a deal, but im just on the sidelines for now.
But we've seen this market "float up" day in and day out for years on nothing... so 55 pts in a few days on nothing isnt anything new i wont be surprised if we go up a lot more on a deal, but im just on the sidelines for now.
To understand the market one needs to have basic understanding of game theory. There are some outstanding books on it if you never took the class in college. But it explains why the market does what it does.
Quote from Tsing Tao:
So if a 55 point S+P rise based on rumors of a done deal is normal, then we shoul dbe seeing around a 55 point decline now that "negotiations have fallen apart". Right?
Right?
That's not how game theory works. Study the "prisoners dilemma". A very simple but constructive introduction to how the process begins to work.
Quote from Tsing Tao:
So if a 55 point S+P rise based on rumors of a done deal is normal, then we shoul dbe seeing around a 55 point decline now that "negotiations have fallen apart". Right?
Right?
It's just more evidence that the Fed is overly accomodative...
(i.e. the herding into stocks due to ZIRP is almost comical).
I don't trade stocks and I don't carry any futures positions overnight. But if I were a longer term equity trader/investor I would simply never fight the Fed. That would be rule one of my plan.
An addiction to cheap money is very similiar to a heroin habit to the markets. Once hooked -- and we certainly are that -- the longer term consequences are both predictable and disasterous. BUT ... and it's a big but, as long as there is a steady supply of the drug all seems well for an incredibly extended period of time.
An addiction to cheap money is very similiar to a heroin habit to the markets. Once hooked -- and we certainly are that -- the longer term consequences are both predictable and disasterous. BUT ... and it's a big but, as long as there is a steady supply of the drug all seems well for an incredibly extended period of time.