Markets are sending clear signals …
Friday May 7 – day after Flash crash trade, SPX opens at 1126 and closes at 1,110
Monday May 10 – market opens at 1,160
Thursday May 13 – market trades at its intra-week high of 1,175, closes down 1.4% that day from the peak
Friday May 14 – market sells off again, with heavy selling pressure at the open
Monday May 17 – big selloff intraday with a huge recovery rally
Tuesday May 17 – the week’s bear market begins, with a strong open and a decline of 2.5% that day …
Thursday May 19 – already down to 1,086 (almost at the “Flash Crash” lows). Market is down 7.5% since the peak on the 13th
Markets are in untested waters. I would like to give a great quote from Larry Hite, one of the premier systematic investors of our times:
“Two basic rules: 1) if you don’t bet, you can’t win, and 2) if you lose all your chips, you can’t bet.”
Keep that principle in mind. Why do we say untested waters? Because sovereign risk is an ugly situation for markets to face, because it isnt about corporate profitability, it isnt about market sentiment, it is about global macro panic. It is about the potential for a new global crisis …
Trade safely,
The Covert Analytics Team
Tags: Asset Allocation, ECB Greek crisis, EU, Greece