Our financial futures

I used to be very interested in systems that made money on the stock market. Systems using Technical Analysis to buy and sell. The last year has been a good opportunity for those with the knowledge to make good money in the volatile markets. I get an email twice a week from Colin Twiggs a trader who I have a lot of respect for. This is what Colin has to say about our financial futures. The red bit at the bottom is the bit that matters. You should take note, weigh and consider.

His comments are with regards recent "green shoots" in the US financial markets. They also apply to here. Colin I repeat is a trader and not a politician.
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This is no blue sky rally. The bear market is taking a rain-check while equities undergo a period of hopeful exuberance. Unemployment is rising, however, and the economy contracting — albeit at a slower pace. Rallies are not always driven by improving fundamentals, but those that are not seldom last. Bear market rallies are mostly sparked by the contraction of short interest as an initial price surge forces shorts to cover. But unless joined by long-term investors, spurred by improving fundamentals, they soon run out of steam as the short interest dwindles.

The current up-trend has shown more stamina and cannot be dismissed as a typical bear market rally. Some long-term investors have obviously drunk the Kool-Aid. But how long will this last?

This is not a typical recession. Our global monetary (and banking) system is broken and we will have to invent a new one. The US, UK and Japan are accumulating debt at an alarming pace, with no serious prospect of repayment — other than monetizing the debt, which would cause hyper-inflation. The situation is massively unstable.

Enjoy the rally while it lasts. But bear in mind that it could end badly. And keep your stops tight.

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