Courtesy of Daniel Sckolnik, ETF Periscope
“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.” — Marcel Proust
The recent uptrend in the equity market has not only been due to some improved metrics on the domestic economy, but as well, to the vague promise that the euro-zone drama has inched its way towards some sort of resolution of the matter of a default by Greece.
This past Friday’s combination of EU news and the subsequent market reaction has, however, revealed once again that the uncertainty of the EU sovereign debt crisis is likely to remain as perhaps the most critical obstacle to Wall Street’s pursuit of a serious Bull Run.
Once again, investors grew spooked by the apparently never-ending drama referred broadly as the EU sovereign debt crisis, and they took the opportunity to lock in some profits from the impressive recent run-up in stock prices as a precautionary measure.
The deep fears of investors over the whole euro-zone debt crisis has been effectively calmed these last five weeks, a period that has seen both the S&P 500 Index (SPX) and the Nasdaq Composite Index (COMP) boast consecutive gains during those weeks. But Friday saw all three of the major indexes, including the blue-chip Dow Jones Industrial Average (DJIA), suffer their worst losses so far this year. And, while the drop was widely attributed to the euro-zone uncertainty, it was no doubt exacerbated by the University of Michigan/Thomson Reuters report that its consumer sentiment index had fallen from 75 to 72.5.
This one-two punch left the Dow down close to 90 points, dropping the index for a 0.5% loss on the week. Meanwhile, the SPX shed 9 points, falling to 1342. While it suffered a relatively small 0.2% drop, it is worth noting that this corresponds to resistance met at the benchmark index’s 1350 level. Technically speaking, this 1350 level may serve as a reflection of the battle line drawn between the success and failure of the current round of Greek debt negotiations.
Up until Friday, recent expectations were running fairly high that somehow, someway, the Greek government would muster the political will to sign off on the latest austerity demands required by a number of euro-zone finance ministers in exchange for a second bailout package. However, it became increasingly clear throughout Friday’s trading session that no firm commitment…
