Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Europe Death Wish

Germany's "Death Wish" of trying to talk out the problems in PIGS while Greece is bleeding to death did happen today - literally. 

It is similar to when you try to protect your pocket money when a member of your family is in grave trouble and needs emergency hospitalization and/or blood transfusion.  A simple fact of life many Americans cannot understand why the US government has to borrow trillions of dollars in order to survive as a nation.  The potential stock markets loss yesterday for the US was enought to satisfy Greece's bailout requirement twice over.  Another extra-ordinary setback the whole world cannot afford in these trying times.

It is now a matter of time.

If they woke up from their nightmarish situation and act accordingly;  we will get a massive relief rally.  Otherwise, if things deteriorate further;  people will start thinking of "The End of the World" again once the contagion fear starts making measurable deleterous economic effects outside of Eastern Europe.

I bought additional ES this morning. 


The wavecount above is not ideal but when true panic sets in; chart pattern tends to go into extreme form too.

They say buy when blood is on the streets.  This time true blood is on the streets of Greece.  Not that I want to do it;  but being a trader has to separate emotion from the job of trading the markets.  At least I do it on the long side rather than shorting Greece and/or Europe.  I bought some NBG yesterday and am suffering the consequences of the extremely bad news today.  Who knows, I might lose big time on this long trade so I set the hard stops today and forget about them.  If the trade works, thank you;  otherwise, this is just another of the thousands of trades I've done before.

For the Bears:


The Head and Shoulders pattern is working and working fine.  Once the target has been achieved;  there will be more than 65% probability the downside will continue after minor pullbacks to the upside. 

For now, we do not know what will actually happen.  A pullback to the neckline is what most short sellers are waiting for to add more positions.  And they will scuttle their trades if Spx re-mounts the neckline.

For the Bulls:



My technical analysis from now on will be more on bull vs. bear cases since the uptrend has practically gone already and the downside is starting to make inroads.  But I cannot make definitive bear cases since there is no definitive bear trend.  At least not yet. 

I was positively bullish from Feb 5, 2010 to last week because there was an upside  trend on the weekly and daily charts.   Now, it is more a coin toss than anything.


ES is now able to produce a 1-2-3-4-5 rally and is the process of forming the A-B-C down correction.  The 38.2% usual initial support is working but price will more likely go down to 50-61.8% fibo retrace levels if not the 79%.


Play the Odds but use routine trading procedure - use stop loss provision(s):


I expect a recovery rally attemp until Friday's Jobs Report.  Whatever the result in employment scenario, it will be tinged by the European crisis and thus will become half-full half-empty situation unless it is truly an extremely good news and/or Europe resolves their problems immediately.