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“It’s All Greek To Me” February 11, 2012

Posted by Tom in Thoughts.
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Sorry, I couldn’t resist.  But it many ways, the Greek / European debt issues are the biggest threat that the US (and the world) economy faces.  The US economy is improving; yes slowly, but it is improving.  Witness the generally positive to very positive earnings reports over the past 3 weeks.  I could go on, but I’m not a cheerleader.

The market weakness on Friday, I believe, was primarily due to traders (not investors) not wanting to take on the risk of Greek “bad news” over the weekend.  The situation there is pretty grim.  We’ve talked before about why Greece is important, in that actions there set a precedence for other EU countries (Spain, Portugal, Ireland, Italy), which are in similar situations.

Lets look at this market via the S&P 500 Index –

Note after we broke out of the symmetrical triangle formation in late December, the market has not looked back.  But we are at a resistance point (last major market high) in the 1350 range.  What happens here is important.  Logic would assert that there would be a correction back down or at least a pause before any resumption up.  But I’m also seeing some internal signs of market weakness.  NO I’m not saying Sell, but rather be cautious here.  Many stocks are over extended at places where corrections have previously come into play.  “The Folks” are getting nervous and it won’t take much bad news to get them to leave this extended market.  Watch price bars and volume to gauge the amount of selling pressure (if any develops).  And nobody knows how long it could last (tho many will predict it).

Here’s a quick view of the top 10 sectors (out of 67) ranked according to near term strength.

Have a good week.       ……….  Tom  ……….

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