Incredible 08-08-08 day. It was supposed to be a very lucky day for the Chinese turned out to be not so lucky as Shanghai Composite Index tumbled by 4.5%. However it was a very lucky day for the Westerner.
Fannie Mae losses came in with a bang, US $ 2.30 billion but that did not rattle the market because investors cheered on the falling crude oil. Crude oil fell 22% from the top which has fallen into a bear market now. Crude oil closed at $ 115.
As a result, equities market closed with a bang, the Dow surged 300 points(11,734), or 2.7%. The Dow Jones Transportation jumped even more spectacularly, 4% up. Nice. It is time to short commodity and long on consumer and transportation stocks.
I think the last excuse for sellers will be growth, at some point, when the market have sufficient catalyst to price in recovery -- that is will be a bigger bang for equities market. ECB hold off their rate hike as I think they perceived their economy is much weaker than they thought. Central banks around the world start to cut rates will be next big thing to watch for the next 3 - 6 months.
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