Bullish In The Very Short Term, Intermediate Term Bearish

The Greek situation is scary. If Greece were the only country that was borrowing  money at an unsustainable pace I would say that this represents a buying opportunity. However, there are a large number of countries, including our own, that are operating in an unsustainable fashion. One must respect the possibility of contagion especially given the recent complacency, negative seasonality and following an 80% rally.

With respect to all the risks we are approaching support at 1150 on the S&P 500. The market is very oversold on a short term basis and we had two days of heavy put buying and some panic. I think we could get a counter trend bounce here in the short term. There is binary risk in the market. If Greece defaults support will not mean much. As such, I will likely play small if I decide to play for a bounce.

2 comments:

Anonymous said...

I agree. Markets are very oversold short term and will probably move higher today/tom.


http://tickersense.typepad.com/ticker_sense/2010/05/bull-market-corrections-a-historical-perspective.html

Onlooker said...

Yeah, I agree with that assessment. We could "drift" down to 1150ish before a bounce, or bounce from here. And then another leg down to test 1150 (maybe as low as 1140) would be a "normal" development from here. Lower is not out of the question either.

The really fascinating development is gold's strength in the face of the strong dollar. I used to be skeptical that that would be the case but I came around to the gold secular bull mkt thesis and hold miners that have been very good to me over the last couple of months.

It's quite apparent that there is upward pressure in that space that is only briefly overcome during the very strong selling spurts in the broader market.

I also hold some PFE (in the green) for which I owe Tsachy some thanks for. Looking at some other healthcare stocks to accumulate on weakness. Any other recommendations? (with the normal disclaimers, of course).