It will be very interesting to see if Wall Street buys into the hype tomorrow. It is one thing for the G20 members to say something like this, but another entirely to act on it. So the question remains: Will Wall Street buy into the message being sent by the G20? If they do, then I think it's going to be game on for equities, at least until the euphoria wears off and reality sets in again (that could be a day or two). If the message is discounted, then we can deduce what exactly Wall Street thinks constitutes the arrival of a solution to the problem - being not this announcement.
The most likely situation I can see is that the market will discount the news, because the G20 haven't actually done anything -- and I think that people in general are starting to wake up to the fact that their governments have failed them ... and the people want some action, not just a bunch of words and coddling.
In Dow Theory news, the Dow closed down -25.35 points (-0.20%) while the Transportation average closed UP 100 points (1.98%)!
This Divergence makes me VERY uncomfortable. If the Dow Transportation average surpasses it's old monthly high of 5334 points, while the Dow fails to confirm by surpassing it's multi-year high of 13279, the chances of a major sell-off (as in a deflationary sell off) become magnified. I will be watching the close for the next few days with great interest.
If you haven't made a plan on how you will navigate volatile markets, now would be a very good time to start.
Consider the following Articles to get your started:
Until Next time,
Peace,
Ryan
