After last week’s sharp rebound, equity ETFs were not only overbought, but also ‘over-hoped,’ as one trader put it.
Concerns about a Greek default sooner rather than later, due to lack of a new austerity plan, pulled the markets lower right at the opening as selling accelerated. It looked pretty ugly for a while as several attempts to swing higher failed until the last hour of trading.
That’s when news surfaced that the Troika gang (IMF, ECB and EU) was engaged in positive talks with Greece (details unknown), which gave the major indexes a lift and cut down prior losses in half.
It’s hard to say whether the alleged progress of the Troika is for real or just another patch-up job attempting to avoid the unavoidable.
The winners of the day were U.S. treasuries and the often for dead declared dollar, while gold headed lower by another 2%, settling at its lowest price since August 25.
Right now, whether you like it or not, the market “is” Greece, as “it’s Greece all of the time.” In the absence of any concrete positive developments, renewed selling pressure is sure to impact all global markets.
Adding to domestic uncertainty was President Obama’s deficit reduction plan, as fears accelerated that the proposed $1.5 trillion new tax plan for the wealthy might not go anywhere.
It’s uncertainty at its finest, so be sure to have your exit strategy in place, should more down side pressure come in unexpectedly.