I was correct: please refer to Relief rallies on soon-to-be Ireland bailout or a bull trap? Watch HFT bid/offers for 'grind' patten, also Risk aversion coming back (update 3) - Ireland bailout looming (update 3)
Apart from a technical analysis as far as saying that most indices (particularly the Dow) prior to the IMF/EU bailout package for Ireland showed an over confidant and over optimistic buy up, that 'grinded' a tight bid/offer range to an almost horizontal line. We know this is HFT trading, we also know how vulnerable HFT trades are (due to rapid buying and selling) when the market losses confidence and begins to sell. Any bot trading, like humans, panic and sell; which can be influenced by negative news on political/market uncertainty. We saw this on May 6th 2010 (flash crash) which was primary based on the short selling of the Euro and the possible default of Greece; a sell can be dramatic as long positions are then scaled into short positions; on mass.
At the moment the markets are running on thin liquidity with sell off's that are usually followed by a consolidation before the close of trading. That is an ominous patten.
From the close of the 18th/11/2010 a bull-trap was formed, this might be the trading trend as gaps are filled with sells orders on an open. So I don't think we are going to see massive breakouts on 100points rallies towards the end of 2010. Too mush risk about, that and the market is finally waking up to the fallacy of 'bailouts' and ineffective Federal Reserve money printing, there will be corrections that may send the Dow, S&P500 much lower.
The market will need to factor in political ramifications of the Irish bailout, which it missed and comparing the bailout to what occurred with Greece was a bad comparison in the sense the Greek economy is smaller and quite irrelevant (as it was the short selling on the EUR and bond yields that caused a alarm to go off at the ECB/EU). The main problem economies in the PIIGs are the trillion dollar economies like Spain; the political/social and economic shocks would reverberate much harsher in global markets than Greece. Ireland is a wake up call because the populous are the ones who will lose out on a bailout package i.e protests, riots. This could extend further into Europe that may shut down Europe (industrial strikes) and cause political turmoil.
That is the fear.
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