Sometimes technical analysis can offer little in the way of direction when a catalyst appears that the technical indicators have no way of interpreting in advance. The Greek referendum is one such catalyst. But with catalysts like this, technical analysis is not needed until after the event unfolds and markets have reacted.
Today Greece voted overwhelmingly NO on the question of additional austerity measures to save their country from a probable bankruptcy. With a solid mandate from the people it would appear that citizens believe this will strengthen their hand in negotiations but instead it may mean an exit from the EU and the Euro.
Market Direction Outlook for July 6 2015
This evening there is no need for a look at advance decline numbers or the technical tools chart. Monday will see a stock market falling and bonds rallying. The outlook is lower for stocks but the dollar will rally as will bonds.
This week could be pivotal for the S&P. The next move lower in the S&P should take out 2050 and then head to 2025, both of which are very light support levels. As long as the 2000 level holds, this catalyst to the downside will evaporate. What will follow after this catalyst to the downside burns out will be an opportunity to purchase stocks cheaper for another rally back up. However on Monday selling could be stronger than expected. Many investors who bought after Monday’s plunge last week, confident that the analysts were right and Greeks would vote Yes, are now looking at losses. These investors will probably want back out on Monday which could add to the expected sell-off.
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