The Greeks voted for the pro-bailout candidate helping the EURO to stay intact for now. Initially, futures markets cheered pushing higher. However, for a few indexes the rally would not last. Spanish and Italian stock markets reversed hard and closed negative while the DAX was able to hold up closing positive. Here in the states stocks go off to a bad start, but a better than expected NAHB housing index helped push buyers back into the market. Sellers turned complancent as the VIX was down more than 11% at the lows. By the close the Dow closed in the red while the NASDAQ closed higher. With the Federal Reserve Open Market Committee announcing a rate decision Wednesday traders will be unwilling to step in front of the fed. A mixed day considering the consensus thought was we were to rally big with the Greek vote.
Another interesting development was the way Small Cap stocks lagged the general market. The Dow did end in the red, but if we had a risk on trade Small Cap stocks should have been able to push out gains rivaling those of the NASDAQ. Small cap stocks could play catch up tomorrow, but on a day where we were suppose to rally more than 1% it sure looked mighty weak.
The VIX closed below the 20 level since 5/11 a show fear quickly left the market. A big drop in the VIX would normally have been accompanied by a big stock market rally. The S&P 500 couldn’t even close up 2 points on the day. On the other hand, the NASDAQ was able to close .78% higher on the day as big cap technology stocks lead the way. Volume was lower than Friday’s bloated figures, but it was lower than Thursday’s level. Institutions do not appear to be willing enough to pour back into equities despite the recent gains by the market. Volume needed options expiry to jump above its 50 day average. Volume could come in late, but 11 days after the low we still are waiting.
The Federal Reserve two day meting begins tomorrow and will announce its rate decision on Wednesday at 12:30 with Bernanke speaking around 2pm EST. We’ll get a sense if the market was right in sensing the Fed will commence QE3 or not. Until then, sit back and enjoy the ride.