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Europa: once again an important “nothing” came out

Here we go again. How many times have we heard the same proclamations out of the European leaders summits? Investors are hoping for leaders to give them a solution and they take every word those politicians say very seriously and – overreact.

So what we have heard so far? Nothing actually. Every day we hear about a new great deal which will save the Euro zone and which actually doesn’t solve the problem, but the meaning is to calm down those bugging investors out there. There is no other solution, just to shut them up.

So what is the “new deal” today? In one word, the Union will now control national budgets and punish those who won’t follow the rules, currently approximate 0.5 GDP budget deficit. How they want to do it no one says. Greece had balanced budget and strong economy until the Union found out that all their numbers were fake. Italians were playing with number too and even France and Germany were twisting them a bit as well. How you want to keep and force the rules when those who made them do not follow them themselves?

Well this is a “great deal”, really! But how does this deal help countries such as Greece, Italy and soon Spain, Ireland and Portugal? It looks like that the only optimists here are Germany and ECB who fight the crisis until their last breath and it slowly gets to the point of their last breath, literally. Their ability to deal with this crisis is limited day by day and their options are shrinking every minute. They know it and they know that soon there will be no ammo to fight it. What will happen next?

Are you prepared for the life after Euro?

As I wrote this morning, it is a pure utopia that European countries would agree on centralized monetary system. The former communist countries who have a bitter experience with centralized economy and who are more prone to more liberal approach will hesitate to agree on something like this and traditional rivalry among European countries such as the trio Britan-France-Germany showed up as well, when British prime minister told the latter leaders “Go figure with this…”

And Ireland? They are claiming that the new agreement must be approved by people’s referendum. Amid the mess in European Union it more than obvious what will be the result of such referendum.

All this clearly indicates that Europe is divided as it has ever been or worse.

But the market (investors) hopes that this new deal once again saves all of us although all these proclamations are just postponing the inevitable.

So how we are doing trading this market?

It is very hard trading the news-driven market. Huge up-trends one day are replaced with huge downtrend the next day. Hard to predict what politicians come up with and whether the market will like it or not. All fundamental and technical analysis is worthless or doesn’t work that well as it typically does. As a small investor or trader it is very frustrating. On one hand your own logic cannot grasp the irrationality on the market which literally breaks all “laws of physics”. If you do not have guts for this the best way would be to stay aside. If you can sustain this mess a bit then watch the market and be buying fundamentally strong stocks which are beaten down by this mess. Don’t spend all your money available, but be buying in smaller portions and look at long term trend (if you find some). As an active trader be selective and relay on technical analysis to avoid emotions (easy to say, hard to do).

Happy Trading!

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