Monday, August 1, 2011

Relief Rally Coming.

The whole of last week, I have urged readers not to panic. I have said time and again that we are sure to raise the debt ceiling because America cannot afford to lose it’s standing in the world market. And there are still some degrees of self-respect left in Washington, whatever others may say. 

This debate has been a dark reminder of what happens when fanatics hijack the political movement. But America has seen worse times before and has always come out winner.  Yes there are corruptions, incompetence and even arrogance, but that does not make America any worse than other countries. That is how a constitutional democracy works. It is a chaos theory in works. If you think America is dysfunctional, then you should go to India, the largest democracy in the world, surrounded by hostile neighbors, constantly attacked by Muslim militants from Pakistan and yet becoming the economic powerhouse. There is more corruption there than you can even imagine.

Countries become great because of its common people, not because of the politicians. America is what it is because of the ordinary Americans. So when someone vilifies America because of the debt ceiling deadlock that is most unfortunate.

Share market may go or down, but that does not make a country.  Yes, our politicians are incompetent and have bought shame on the country. And America will have a chance to punish them soon in a peaceful democratic manner.  Did America solve all its problems? No, there are more serious challenges ahead of us. The world growth is coming to stand still and the debt super cycle is about to go bust. But we need objective analysis, not fear mongering.

Those who spew venom and vitriol for the whole of last week and shouted the imminent demise of America, pity on you. We know your agenda. You have been planted to create panic. You succeeded for a while, but America defeated you.

As I have been saying all along, there will now be a relief rally, which will be huge and most likely we shall see a new high in August. But that will be an opportunity to sell in the rallies. For now let us enjoy the rally.

Viva l’America

Further to my morning post, it seems the market is keeping the pressure up on Congress. It opened higher, but came down hard on manufacturing ISM. In USA, manufacturing is not a major part of the GDP, so the reaction is not rational. Moreover IWM has not sold off much. So I suppose some internal strife going on and they want to totally destroy all the new bulls and trap some more bears.

I am long from around 1300 level so right now I am under water. I am holding to my longs and I shall be adding to them soon. May not be today. I still do not think that the market is falling off the cliff, yet.