Greg Guenthner

Last-minute bailout…

Where have I heard this one before?

Eleventh-hour deals are quickly becoming the norm these days. Cyprus has become the latest member of the just-in-time club, notching a deal late last night in Brussels to grab its $13 billion bank bailout.

The third-smallest eurozone economy didn’t come out squeaky clean, though. There’s still the matter of shuttering its second-largest bank. And anyone with an account larger than 100,000 euro is taking it on the chin.

Of course, these new developments have triggered a huge relief rally for the U.S. markets, which plummeted last week as the Cyprus banking crisis began to unravel.

Wait a just a minute — that’s not what happened at all…

In the real world, the S&P barely budged last week, finishing Friday afternoon down less than a quarter of a percent since the weeklong crisis began. This morning, S&P futures are up four points. That’s it. Four measly points. Hardly worth noting, really. In fact, the reaction to the entire Cyprus situation here in the U.S. has been completely and utterly mundane.

If I could somehow black out your access to charts or any other market information, you probably would have thought that the situation in Cyprus had brought the market to its knees last week. The financial media was all over this one (again) with its manic reporting. Every headline and blog post just one week ago breathlessly predicted doom and turmoil. This morning, they flip the switch to talk of all-time highs again:

Reuters Headline

The financial media has you strapped to some sort of twisted carnival ride, yanking at whatever vulnerable emotion happens to bubble to the surface any given moment. The fiscal cliff reporting just a couple of months ago was no different. Same with sequestration. Now it’s Europe again.

You can’t build a solid investment plan off these sensational headlines. There’s no sense in puking your guts out on the media’s spinning wheel of terror. When you buy and sell based on the crisis du jour, you’ll find nothing but pain and losses…

Greg Guenthner
for The Daily Reckoning

Greg Guenthner

Greg Guenthner, CMT, is the managing editor of The Rude Awakening. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.

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