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The next medicine

Posted by Dan on July 2, 2012

Some large swings up and down in the markets last week.
The increased volatility could suggest that we are setting up for a bigger move up or down…
The chart for the Nasdaq Index has not changed much (click for larger image):

Nasdaq

We will remain in lunar Red Period this week. This makes me wonder whether Friday’s strong rally will get any follow through this week.
After all, they only announced yet another new box of medicines for the EU and the Euro, but that doesn’t mean the patient is back to health already (or will be any time soon..).
So, we could very well drop back to the 2850 area in the coming days.

What’s the real problem with the economy?
Well, this picture sums it up:

economy

Austerity cannot solve the problems, because that’s like putting the donkey on diet and hope that he will get with his feet back to the ground.
Stimulus does not solve the problems, because it increases the load on the cart which will not get the donkey back on his feet either.
The only way is to unload the cart, and get rid of the excess baggage. Then the donkey comes down and can be put to work again.

So, as long as you see governments announcing austerity or stimulus or both, know well that it will not solve anything.

Good luck, Danny

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