Sunday, July 5, 2015

Greek Haircut

The Market Trend Model (data sheet) moved to a negative bias during the week as the uncertainty of the ongoing Greek debt crisis continues to leave stock market participants nervous.  Additionally, Puerto Rico took advantage of the Greek debt crisis and announced their own debt insolvency (article). 

The market indexes have once again fallen into the trading ranges that have  for months capped their upward progress. The Russell 2000 (chart) was unable to sustain its recent breakout and this index moved lower to an area around its most recent level of trend line price support.  The Nasdaq (chart), the Nasdaq-100 (chart), and the S&P 500 (chartalso moved lower to areas around their most recent level of trend line price support.

It remains to be seen whether a resolution to the Greek debt crisis will bring calm to the stock markets.  Once the Greek debt crisis has a definitive resolution questions will linger as investors wonder which country will be next to announce their inability to pay off staggering amounts of debt.  It appears the consequences of nearly a decade of quantitative easing will ripple through economies around the globe for months and years into the future.

Perhaps an expanding U.S. economy in the second half of the year can soothe stock market jitters, but I would expect a bumpy ride as economies across the world struggle to achieve growth and higher employment in the face of ever expanding debt loads.

As always, remind mindful that anything can happen from one day to the next.