FOMC Raises Rates Watch

The Goog rally of last week looked like it might shield the rest of the market by forcing more than a short covering rally, but the markets still seem to have that fatigue factor mentioned on an earlier post.  On the pattern side, there is action much like that of 2008 where the market topped in  May and slid until March of 2009.  

Fed could raise rates in September but might be put off by a sharp selloff in equities since the world central bank's actions have to date been used as a function of equity price protection.  Equity prices are putting in some discount in front of Wednesday's FOMC announcement just in case Yellen decides now is as good a time as any to raise rates.  Selling could last through Monday's trade before the Fed watch begins.  Commodity prices are also in a raise cash sell off pattern as prices continue nervous liquidation.  

EU Central Bank will Fail on Collecting Anything in the End

The Greece deal outlined on Sunday will never lead to repayment to the banks and unfortunately at some point the weaker links in the EU will have the same economic failure as the Greeks.  The EU will shrink to a small collective with the fallen members making their way as outsiders. The Euro was a currency created as a pipeline for the EU central bank to originate loans to members on one hand and to more easily make claims on assets on the other.  Economic dramas will continue to erode the EU in what was basically a flawed idea based on a concept that a common currency would magically be able to hold together so many uneven nations.  

As for Greek leadership, they are really bad at playing the decision game.  If the Germans would not modify their rigid position then Greece had no choice but the default and play out the hard end. They can only take solace in that the game they are playing has few winners.

Market Fatigue

U.S. indexes may be too tired to take out the May highs.  Then if so, any rallies are just pauses before the next break and the the 2008 decline pattern is still intact. Back then the markets continually provided opportunities to sell as the bulls refused to die.  Eventually the battle lines became a rout however as it all descended into year end lows.

Now pattern recognition has its place in trading and certainly many from HFT to more passive minds have attempted to deliver returns based on mining the approach.  But is usually disappoints.  Big data's snooping approach in the area has been a big dud so far but the tweaking will undoubtedly continue.  

So Greece and China may just represent a part of a story of fatigue.  The former tired of lifting bad paper and the latter exhausted from central planning.

Greece, China, and EU

Markets banging around as Greece and surprisingly to a lesser degree, China, make all equities holders a bit uneasy.  China using all the tricks they tried in the US at the time of the crash of 1929.  Galbraith's book "Great Crash 1929" is great reading and illustrates the absurdity of orchestrated efforts by brokerage.  You can bet these same folks were talking about stopping the declines by raising pools of funds and at the same time selling theirs through someone else.

Greece has a bit of a different significance.  It represents the ability of banking in Europe to keep in place a system where the top has no risk and everyone else has to step out.  Greece should play the banks and look for relief through hard talk regarding the weak link now being created by bank hardliners.  Shine a light on the next stumble and its devastating potential to the EU.  They will pay to shut you up.