The Wrap 7/27/11

{+++} It was a very tough day today as some stops were hit, but as you know it’s part of the game. The front page story is obviously Washington, the debt ceiling, and our own debt downgrade, however Europe is still a mess and we had a dismal durable goods number that started off the day.

The S&P has been down everyday since the week started and it closed today below the 50 day moving average. Not great, but not the end of the world either. We may be heading into a double dip recession, maybe not, but money is going to the sidelines and in precious metals this week.

What is starting to happen is a classic case of “get me out”. We have seen this movie so many times before, and we are still standing. The media exists for these headlines and has no trouble pounding these headlines into out foreheads ad nauseum. Turn it off, I do, my brain leaks less when I do.

Fear and greed are incredibly powerful emotions, the media smells this and exploits this.

What I think will happen is this.  A deal will get done, neither side will be pleased, but the market will love it because the wet blanket known as “uncertainty”, will be temporarily removed from the market, until we find another wall of worry to climb. That wall is the same, it just shifts around a little bit.

In the meantime, as I usually preach through earnings season anyway, play it small as this week has been treacherous. The key to long term success in the market is to get through these tough spells with paper cuts, not ax wounds, so you can make the money when we turn and get a trend again. We will turn up soon I believe, and I will address some ideas soon with a way to play it.

Get a good rest tonight. The P&L is updated.


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