With the European banking system on the verge of total collapse due to the hair cut they would have to take from the Greek sovereign debt they hold on their books, it is very likely that central banks in Europe and the US would print as much money as needed to continue to support the markets and in fact the entire financial system.
This is not to say that their actions would solve the problems. On the contrary, a problem of too much debt cannot be solve with more debt. What they are doing is just going to postpone and exacerbate the crisis.
This is not to say that their actions would solve the problems. On the contrary, a problem of too much debt cannot be solve with more debt. What they are doing is just going to postpone and exacerbate the crisis.
In the short-run money-printing will continue to lift asset prices. In fact, as we can see from recent Zimbabwe's experiences, asset prices (including stocks) will continue to accelerate their rise as more and more money needed to be printed to bail out the escalating debt problem.
I would expect, as the debt crisis continues to get worse, central banks should continue to print money, the markets should to go up. Many funds who bet against continuous money-printing (short-sellers) by central banks are now getting squeezed.
Key level for NQ for Monday is 2400, and key level for S&P (ES) is 1280.
- Above 2400 implies NQ should explode to the upside.
- Below 2400 implies it is in a pullback or consolidation mode, with downside target of 2350, then 2320.
