Dubai Reminds Us What Greece Would Like Us to Forget

Renewed concerns regarding Dubai's debt remind us what we need to remember about Greece and the EU - a quick fix is not going to make the problem go away. On a day we see a 20 point rally on the S&P, and the dollar and yen receding, it is tempting to think that the worst of Greece is behind us. But then Dubai reminds us - not so fast..... First, the S&P is rallying straight into a resistance level at 1100. Even if it manages to break this resistance, it still has to retest a much stronger resistance at 1150, so let's hold the celebrations (See chart below). Second, let's be aware of our human nature - we like to see that glass half full.

As humans we have been blessed with  a short, selective memory. This unique feature helps us surmount life's most excruciating . Individuals and societies alike are programmed to leave behind painful memories and march forward toward a better future. This mechanism can help us overcome personal or national tragedies. Unfortunately, this same mechanism can also condemn us to repeat our mistakes, as we conveniently forget the undesirable consequences of our actions. So what can we do? we need to stick to the facts and not trade on "hope". Remember that markets reflect expectations and not necessarily current, underlying conditions. As such, markets can fluctuate wildly as expectations change but fundamentals remain more or less the same.