Investors may have spent an uncomfortable weekend wondering if Monday would recapitulate the crash of 1987. Having made a big splash by forecasting an S&P of 1565 a few days ago we would like to go further out on the limb and predict a Monday of rebound – perhaps dramatic.
This is based on the European defense of the euro and its rescue package for Greece which is being announced this weekend. We think that the Europeans are in the process of punishing the speculators and we expect to see speculators suffer losses in the euro and gold and debt swaps.
That is exactly what we would do if we were the European Central Bank. Punish the Soros-wannabes.
This would also punish Elliott wavers and bears who got ahead of themselves.
Now let us consider this all as perhaps groundless speculation. Technical analysis has nothing to say about this situation. (Of course some analysts will deny this and maintain that their oscillators are working overtime. Our response: if they are so smart why aren’t they rich?) This is all about market savvy and instinct which as everyone knows is right 50% of the time and wrong 50% of the time.