Do not panic. Financial crises are great for stocks. These are the times when stocks bottom and rise sharply.
Why? Because central banks panic and inject huge amounts of liquidity in the banking system to cushion the economy from serious setbacks. And protect the lenders.
This is what is happening exactly at this point in time. The European Central Bank is putting Euros 130 billion in the economy to protect banks in crisis such as BNP. The Fed is also active. The Treasury is lending some of the huge cash receipts to primary Treasury bond brokers.
The global financial authorities are doing what they are supposed to be doing during crises. Flooding the markets with liquidity.
And yes, you guess it right. Liquidity is the lifeline of the stock market.
Be patient, a powerful move on the upside is just around the corner.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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