Friday, June 24, 2011
Looking Ahead
The Greece-EU news was a squeezer but it only sets up the importance of the Greece austerity vote. It happens next Wednesday and it will be a classic event day. So I am expecting a high probability of weakness next Monday and Tuesday. But for Friday, it is a bit of a crap shoot. That short squeeze at the close on Thursday takes away a lot of the bear fuel and makes the risk reward a 50/50 for today even though I think higher probability we go higher today. You see, I give it about a 50% chance of going up ~10 points, 25% chance of it being near flat from the prev. day's close, but a 25% chance of it going down ~20. But if we do get that move higher to the 1290-92 area, it would be a good short opportunity to capitalize on the uneasiness ahead of the Greek vote.
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7 comments:
It's all a bit of a joke. Even with "austerity", the situation in Greece is hopeless. And other eurozone countries won't be able to finance Greek profligacy forever -- for the politicians this is untenable, they'll all be voted out of office. But the markets have been more or less ignoring this reality for some time, and who's to say that won't continue? It'll be interesting to see what happens to dollar/euro with these eurozone problems and now that Bernanke has repeatedly nixed QE-3.
there should be one last horror selling from here to the intermediary bottom and subsequent rally. markets are extremely weak for 5 days following summer solstice
Yes, Greece will go bankrupt eventually but the EU doesn't want it to happen while it's on their watch. It is bailouts R Us forever. We have to live with that type of market and learn to trade it. Fundamentals take a backseat to emotion during these news events.
which is why markets won't followthru rally here on the open. greece is chopped souvlaki however one wants to spin it. yesterday a 3pm scare tactic squeeze on shorts when shorts were complacent.
could catch a bid at 1268 area
You know the real reason we're going down is because holding stuff over the weekend hasn't been exactly a good idea the past few months. This is exactly why I'm expecting a pretty significant gap up on monday, just like june 1st being an exception.
There is some ridiculously strong bear pressure in this market by the way, and you see what happens the second that pressure falls away. The S&P rallies 10 points in 5 minutes and then some.
People going short or selling into this weakness are the trend followers and the ones who are most easily smoked. Give it one close above 1300 and we'll be at 1400 within the month.
what bothers me most is the overwhelming amount of positioning for a V bottom from last week's levels off sentiment studies. many indexes/sectors are teetering right at support or has broken support this past week and hardly anyone on the blogs and media are giving much recognition of this which makes this even more bearish. but events in greece this midweek acts as a put at around s&p 1220 so crashes could be limited to 40-60 points.
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