It Doesn’t Matter What You Think


Global markets had a rough night. European stocks finished down nearly 2% while major US markets closed around 0.5% lower. Brent crude fell nearly 2% while gold was up 0.5%.

Worries about a Greek default drove the overnight moves. That’s hardly a revelation. The market has been yo-yo-ing around on Greek news for months on end.

But there’s no panic about it. Considering a Greek default and exit from the Eurozone will jeopardise history’s largest currency experiment, you’d think there would be a bit more concern, wouldn’t you?

But because the debt that Greece is about to default on is now in the hands of various taxpayers, the market doesn’t really care.

What’s amusing is how the establishment media can’t for the life of them see the situation from the Greek perspective. Gideon Rachman from the Financial Times writes an article with the headline ‘Four games the Greeks may be playing’.

Yes, Greece lived high on the hog for years as banks plied it full of cash. Give an alcoholic a drink on credit and they’re hardly going to knock it back are they?

Shared responsibility though? Of course not. It was all Greece’s fault. In order to keep the bankers’ loans ‘good’, the Euro elite, along with the IMF, kept Greece on life support. In the meantime, the banks slowly sold off their holdings of Greek debt by transferring the risk onto German taxpayers, among others.

They achieved all this under the narrative of a ‘Greek bailout’.

But the Greek people themselves knew what was going on. They saw that it was a stitch up and a rescue of the big banks at the expense of the people. So they used their democratic right and voted in a party who would stand up for them, rather than put up with the Euro yes men who got them into the problems in the first place.

Now that this party is doing its job, the establishment can’t understand it. They’re used to weak politicians who do the bidding of the bankers, the IMF, or the European Central Bank. When they don’t play along, they are obviously ‘playing games’.

Here’s the latest comment by Greece’s leader, Alexis Tsipras, quoted in the Financial Times

‘“One can only suspect political motives behind the fact that [bailout negotiators] insist on further pension cuts, despite five years of pillaging, Mr Tsipras said in a statement. We are carrying our people’s dignity as well as the aspirations of all Europeans. We cannot ignore this responsibility. It is not a matter of ideological stubbornness. It has to do with democracy.”’

That doesn’t sound like game playing to me. What does though is the creditors’ insistence that Greece remain in a perpetual state of recession/depression in order to mask the fact that the elites conned German taxpayers into bailing out the banks.

As wrong as it all is though, it doesn’t mean markets should fall significantly on news of a default. As my mate at Quant Trader Jason McIntosh likes to say, ‘opinions don’t count when it comes to trying to make money. The only opinion you should listen to is the markets’.

This is what makes our unique trading service, Quant Trader, such a powerful tool. It generates buy and sell recommendations based on the all-powerful opinion of the market, not on what Jason ‘thinks’.

So if the market isn’t too concerned about the prospect of a Greek default, you have to respect that.

Have a look at the Dow Jones Industrial index over the past year. It’s been in a steady upward trend and remains so despite the sideways movement so far this year.

Note the blue and red lines in the chart, the 50 and 100-day moving averages (MA). The 50-day MA has consistently been above the 100-day MA. According to the Quant Trader system, this defines an index or a stock as being in an upward trend.

Remember the big correction back in October last year? You can see the sharp pullback on the chart. That correction spooked many people out of the market, or kept them from buying in.

But according to one of Quant Trader’s rules, it was nothing more than a sharp pullback within a broader upward trend. As you can see, the 50-day MA never crossed below the 100-day MA. The upward trend was never violated.

This is what makes having a set of trading rules so powerful. It helps take emotion — and opinion based on emotion — out of the game, at a time when you’re likely to be highly emotional (during a sharp sell-off).

If you’re keen on learning more rules like this to assist with your trading or investing, keep your eyes peeled over the next day or so for a special invitation.

Yesterday I recorded a series of video tutorials with Jason McIntosh, and we’re making them available to you, free of charge. All you have to do is sign up to the invitation that will hit your inbox in the next 24-hours.

Seriously, if you want to get better results from investing or trading, I can guarantee that you’ll learn a lot from the tutorial series. The key takeaways are deceptively simple. But people, for one reason or another, think that success only comes from following complex strategies.

As Jason will show you, that is certainly not the case.

What about the Aussie market then? How’s that looking in the eyes of Quant Trader?

Well, as you can see in the chart below, the ASX 200 isn’t looking too sharp. The 50-day MA is just about to close below the 100-day MA. While such a move doesn’t necessarily signal that a new downward trend is imminent, it does tell you that the market is weak. We could be in for a prolonged period of sideways movement at the very least.

Much of this has to do with the sad state of the Aussie economy. The commodity bust that started in 2011 is finally making its way through the rest of the economy.

But instead of responding with smart policy, our leaders are staring at the headlights coming their way. They’re simply trying to get to the next election before they get hit.


Greg Canavan+,

For The Daily Reckoning, Australia

Join The Daily Reckoning on Google+

Greg Canavan
Greg Canavan is the Managing Editor of The Daily Reckoning and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails. For more on Greg go here.

Leave a Reply

Be the First to Comment!

Notify of

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to