What's Wrong With This Picture

The Greeks are out in the streets protesting austerity measures and the citizens of other European countries are in an uproar over bailing out profligate countries. Yet the European politicians continue to insist that the bailouts and austerity measures will continue. Our politicians continue to make soundbites while our deficit sits at 10% of GDP. Right now our deficit does not matter but most imbalances do not matter until they do. Add to this that we are in the seasonally weak part of the year and QEII is ending. I believe this argues for a more cautious stance.

While I could see the market making a marginal new high by a couple of percent, there is also the chance that one of the imbalances will finally matter. I don't believe there is a lot of money to be made in a buy and hold strategy and considerable risk. I am in trading mode.  I am currently holding a small core long portfolio and some trading longs. I will likely sell out of my trading longs as we approach the year's highs.


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