As predicted we had a nice rally yesterday but by the end of the day, most of the gains were lost.
It was an ABC rally--A up, B down and now C up above A high.Finally both Euro zone and Greece have realized that for Geo-political reasons , Greece must remain within the Eurozone . If Eurozone does not give more money to Greece, It will end up in the arms of Russia and nobody wants that.This is nothing more than kicking the can into the future.
After the current rally is over , we expect the market to continue its downward march whether it happens by the end of today or on Monday or later.
Negotiations with Iran are also in stale of deadlock. When the social mood is bad, it is very difficult to reach an agreement. Largest percentage gain today will in if you were short UVXY but you must get out of it by the end of today. After that go long on UVXY.
The rally in China is a fake rally as more than half the stocks did not even trade. The Chinese Government has banned short selling and selling by people who own more than 5% of the shares for the next 6 months.The bubble in China is very much like bubble formed in USA in 1929. In both cases the markets went down by 39% initially and then recovered 15%. We will stay away from Chinese market. The effect of what is happening to consumers will have world wide consequences.
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