I believe we are seeing a counter trend rally like we saw in early 2008. We thought sub prime was contained and the banks were able to absorb the losses from the NINJA loans (No Income No Job Application). What we (retail traders) didn't understand was the contagion that was occurring in the derivatives market. The same thing is happening now only on a much lager scale. I am not saying it will play out exactly like it did in 2008 but I will be treating any rally in the markets with contempt. Deutsche Bank is following the exact same path as Lehman Brothers did. From what I have been reading about the CoCo bonds it will not end well.
By this time in 2008 the market was already in a confirmed monthly top reversal. The SPX has not quite yet confirmed a monthly top reversal currently, but is right on the verge of doing so. We could possibly expect a similar rally April/May before seeing significant further downside emerge mid year. Take it as it comes.
No comments:
Post a Comment