That Lab Rat Feeling in Markets

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Every so often every trader will be hit by that lab rat feeling. Conspiracy theories racing through your mind. Why up and then down ?

The events of the week just cumulates into that moment. What a lab rat to be duped by the political rhetoric on Greece and the war talk ?

There is someone out there recording all the market moves and analyzing reactions and then, feeding us more data to change our behaviour. We are in a big market experiment engineered by the central bankers and authorities. Manipulating our each and every action.

What is happening ? Greece Debt Deal Talks Devolve into “unedifying Playground Spat” http://www.huffingtonpost.com/2012/02/16/greece-debt-deal-talks-devolve-unedifying-playground-spat_n_1281414.html

Isn’t it all fine now ?

Look at the EUR recovery !!

Haaah !!

I am bad rat. Didn’t fall for the end of the world story yesterday just like I won’t be falling for the everything-is-alright story today.

I will be a thinking rat. What is the risk today and tomorrow ?

What is happening in the world of equities and the economy ?
Staring at the EUR chart all day sometimes does things to your head and you feel that all is over.

 The Positives

* GM just posted record profits last night. http://www.bbc.co.uk/news/business-17062698   but posts loss inEurope.

* Jobless claims in US fall to 4 year low. http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/02/16/bloomberg_articlesLZGIEH0D9L3501-LZHN5.DTL

* Greek Default Will Cost More Than SavingGreece, Dutch De Jager Says. [TOO BIG TO FAIL ?]

* Dow closed near a 4 year high.

The Negatives

* Moody’s may cut 17 banks ratings (including Citi, JP, MS and gang). http://www.bbc.co.uk/news/business-17059203

* Brainard Says US Won’t Give More Funds to IMF for Europe. http://www.bloomberg.com/news/2012-02-16/brainard-reiterates-u-s-won-t-give-imf-extra-funds-for-europe.html

And a good perspective from European Think Tank

“There is no wayGreececan actually ever fully meet the conditions laid down by the EUR and IMF ….”

http://www.businessinsider.com/is-the-greek-day-of-judgment-upon-us-2012-2

And a concise summary here.

Greeceis More Screwed than you realize.

http://www.slate.com/blogs/moneybox/2012/02/16/greece_is_more_screwed_than_you_realize.html

“The key point is that even with full default,Greece is still insolvent and Greece is not a commodity exporter that gets a quick and obvious boost from a devaluation. “

But yet a differing view.

http://www.telegraph.co.uk/comment/telegraph-view/9086430/There-is-only-one-end-to-Greeces-torment.html

However many reforms are imposed, countries such as Greece still require significant devaluation to be competitive with Germany– which can only be accomplished outside the euro.

My 2 Cents Worth

To be contrarian just a little. There is no free lunch.

In fact the best question to ask yourself on each trade is “what is the downside ?”. That was why I was long last night.Greece wasn’t going to default overnight and war isn’t going to erupt tomorrow.

Yet while the world is gunning for the moon today, I will be holding to my horses to look for the levels to short EUR and gang again. Will also be watching for the impossible to happen in USD/JPY – a new top ?

Because lab rats are meant to be tested and I know something will happen in the laboratory today.