Stock Market Analysis

Tuesday, July 07, 2015

Great Grexit Grind

Ever since that scary day I mentioned back in 29 June, the US market has indeed not gone any lower since that big overdone day. This proves that the "worst case scenario" has almost been fully priced in by that big day. So point proven. However, the market hadn't really gone any higher either, what's up with that?

So what happened over the past few days following that big overdone day I now call the "Great Grexit Grind". Since that big day, investors and traders have been buying up against every bad news coming out of Greece almost on a daily basis. This means that the buying has not given up. Yesterday was one of those days where the buying fought hard against the selling. Bond yields continued dropping and total equities put call ratio remained high in favor of put options trading so the market sentiment is very bearish indeed. Make no mistake, this is a very dangerous time. This means that this is going to be a very events driven condition. However, the sooner we see a resolution, making this news series fade away, the sooner the market can go into that final bull leg I have been talking about for so long. And because almost all of the "worst case scenario" surrounding the Grexit has already been priced in so far, the market is now more inclined to upside than downside no matter how the Grexit actually ends, as long as it ends.

For now, the US market turns a short term neutral trend within an intermediate neutral and primary bull trend.

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