That Lab Rat Feeling in Markets

Deutsch: In einer Lebendfalle gefangene Ratte ...Image via Wikipedia

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.