Market Review: Markets in Decline

Given the current state of things in the market things are not looking very positive.  A lot of what the market is experiencing over the last few days is a series of shocks to the market system.  The perception that the fiscal cliff will happen is getting higher and higher as every day passes.  Everyday that the both sides in can't agree to some sort of compromise holds the market hostage, and the last time congress did this during the debt ceiling drama during the summer of 2011 we know what happened.

The other immediate concern is Europe.  According to Mario Draghi's statement a few days ago Germany, the lead economy in the European Union, is starting to see cracks in the armor.  The strongest economy in the region is now being affected, and that is big news. With all of the other concerns that EU has, German starting to falter is a big one for the EU and the U.S.

This leads me to believe that markets will continue sell off, we will get a bit of a rally here or there, but ultimately if the "Fiscal Cliff" does not get solved by the beginning of the year were headed for a downturn much like the one of the 2008 and the Fed will not be able to save us.

The SPY might bottom at around the 50% or 62% fib and relieve rally might ensue leading into Thanksgiving, but all is not well as $140 now becomes a major resistance level.  I am positioning myself to continue to be bearish in all my trades at this point.



Happy Trading