I just watched Mr. Myron Scholes being interviewed by Becky Quick on CNBC.
First off I would like to congratulate Becky Quick for conducting such an informative, non-sensational, and insightful interview. Keep up the good work; we need more of this from the media.
Secondly, Mr. Scholes finished his interview with an analogy. The analogy is true for many aspects of our market, be it the money printing in our economy, or the HFT dominance of the day to day action in the tape. I paraphrase: If you are driving down the highway at the speed limit, and everyone else is exceeding the speed limit, and you speed up, so as to be at the same rate of speed as everyone else, then there is a much bigger cost to stopping. I see his parallels. I think we need to be careful here.
Rick Santelli makes a similar point when talking with Steve Leesman just a short while after the Scholes interview. He opines that it is absurd that our officials have even put us in a so vulnerable position fiscally, with spending etc., that there is such a doomsday risk on the horizon to begin with.
On a trading note, 1121 is a key resistance level on the SP500. It is a Fibonacci 50% number. So your upside as a trader is 2%. What is your downside? Careful…