Last weeks’ low trading volume was typical for this time of the year as many investors and traders turn their attention to more leisurely activities. With Europe on holiday, there is also less risk of some surprise announcement rattling the markets so equities were able to drift higher on low volume.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
The financial markets do not seem to have as much interest in the Sunday Greek election as the financial media.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
The never-ending search for clues about market direction continues despite the turmoil in Europe that will ultimately determine the outcome. In the short-term the stage is set for the bounce that began last Wednesday to continue after the Euro zone finance ministers agreed on Saturday, to lend Spain up to €100 billion, from an undetermined source, to recapitalize its banks.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
From both fundamental and technical perspectives, last week's events were loaded with both doubt and anxiety causing the equity market to swoon while US Treasury interest rates declined to all time lows on safe haven flight capital flows.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
By now, it should be clear to anyone paying attention that the equity markets are declining in response to deteriorating fundamental conditions in Europe. Money flows out of various risk asset classes into dollars and liquid dollar denominated Treasury securities are affecting global economic growth expectations as reflected by declining commodity and equity prices.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.
Those who have been following our comments in the Digest for the last few weeks know one of the reasons we have been urging caution and more hedging was due to the deteriorating breadth or the number of advancing issued compared to the declining issues on the New York Stock Exchange. Last week it changed and for the first week in the last ten, breadth improved. This is a bell ringer.
Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.