Over the weekend news of Greeks queuing for ATMs certainly has caused market participants to think again when it comes to the Greek situation. Sellers took to the market selling stock as technology stocks led the declines. US treasuries are where many risk adverse traders parked their cash as the 10 year yield fell to 2.31%. Today’s session has confirmed the uptrend there is a possibility of a new downtrend forming here. VIX jumped more than 30% today as the fear index approached levels not seen since the beginning of this year. Volume will not be able to eclipse Friday’s level due to the Russell rebalance, but due to the price declines volume doesn’t matter. Today is the precise reason stops are an integral part to our system and one that has protected us. It will be a busy evening scanning and entering orders. For now, weakness has prevailed and we will adapt.
A few of our platinum subscribers took advantage last week by hedging their portfolios. Click here to get 40% off the platinum price when you enter coupon code: SUMMER. Whether it is calls on TZA or SPXU or even getting into VXX hedging was the smart strategy heading into this past weekend. If a deal is to be made will the markets be able to hold a rally? It is anyone’s guess and precisely why hedging was smart.
While the Greece situation worsened we now know Puerto Rico is once again in trouble. Many of these places are running into trouble because they are not reforming their structural problem. At some point adding more debt to pay for existing debt catches up. If you do not have the income to support such debt levels something breaks. Same goes for Greece and unfortunately any country running endless deficits without being able to print their own currency. At some point the proverbial straw breaks the camel’s back. To us, all that matters is price and riding the trend as long as we can.
Chinese equity markets have no entered a bear market. The Shanghai is off more than 20% of its previous high. Let’s take a moment and remind ourselves the index is up 25% this year and up 98% from a year ago. While 20% is extreme the index has had quite the run. Will Greece be the country that tips the scales on these equity markets?
After today’s selling it would not be surprising to see perma bears talking about a Stock Market Crash. Anything is possible, but how long have these bears been talking about a collapse of the US equity markets? A long time. Predictions are dangerous and so far the prediction of a crash has yet to happen. Thus, many have been left behind during this run. Don’t be left out! Stick with Big Wave Trading.
Small caps were the worse hit, but given their rise it is no surprise especially when you have a risk off environment. Risk assets were sold today plain and simple. Do not make it more complicated than it needs to be. Let’s see where this market takes us next!
