Thursday, February 25, 2010

More Greek Concerns Washing Up On Our Shores

The market is under heavy selling pressure this morning, on news that Greece could be downgraded at S&P within a month. Greece really needs to take some strong measures towards fiscal reform, but right now they seem to pointing fingers at other nations instead.

Although Greece is small, the worry stems from the fact that if Greece gets downgraded, who is next in line? Spain? Ireland? Portugal? etc, etc.

This is causing further pressure on the Euro, and in turn supporting the dollar. Commodities are mostly lower, with oil trading down to $78 and gold slightly lower at $1095.

Economic reports here in the U.S. this morning were mixed, with durable goods rising more than expected at +3.0%, which marks an acceleration from last month. But jobless claims were a bit higher than expectations.

Asian markets were lower overnight, except for China which bucked the overall weakness for a 2nd day; the 10-year yield is lower again to 3.64%; and the VIX is spiking +7.5% today to 21.79, thought that is well of its earlier highs.

Trading comment: I mentioned that the market was still overbought, and as such any negative news usually gets amplified in terms of selling. But negative sentiment is on the rise, with the CBOE p/c ratio opening at 1.27 today, and the ISE call/put hitting a low of 71 earlier. Rising bearishness is a good sign to support my thesis that any further pullback likely will not break below the early Feb. lows, and will present a good buying opportunity.

Yesterday we added to our Visa (V) position, and I will continue to look for spots to add exposure. In terms of groups, I still like tech the most, followed by insurance stocks (KIE), med tech, healthcare and retail. I am shying away from adding to commodity exposure right now, including oil services, agribusiness, etc.

long KIE, V

1 Comments:

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