Having said that, the roiling was nowhere near as great as the news reports would have it. Tuesday's close, $18.48, was 1¢ above the close on Monday of last week, April 19. This is not a plunge into the depths. It's not a 1987 replay.
| trend | adx | psar | pps | macd | macd trend | sto | sto trend | |
|---|---|---|---|---|---|---|---|---|
| SPY $119.12 | ||||||||
| VIX 18.84 | ||||||||
| TLT $91.01 |
And indeed, blue chip stocks (SPY) opened this morning half a percentage point above Tuesday's close. In other words, SPY reclaimed nearly 19% of yesterday's losses. At the open, at least. We'll see what the day brings.
Treasury long-term bonds (TLT) opened 0.9% below Tuesday's high, another indicator that the Tuesday's sharp rise in price (decline in interest rates) was less than met the media's collective eye.
The challenge for a technical trader, like me, is what to do about the signals. SPY from yesterday began showing a parabolic sar bear flag, confirmed by Person's Proprietary Indicator. But by my rules, as reflected in my daily scans, I reject entering new position based on price movements inspired by news events or corporate announcements. Do I then abandon the bullish analysis based on signals triggered by news, or do I wait it out a bit to see what tale the tape tells me?
My inclination is to wait a bit. Besides, SPY is weakly trending, with an average directional index of only 19, and so it's prone to whipsaws. The next whipsaw would be in favor of the bullish case.
Can the Greek debt crisis bite the American economy? Sure. If the euro weakens, and the dollar strengthens, then U.S. exports become more expensive abroad. That would hurt some companies. On the other hand, imports from abroad would become less expensive in the U.S. That would help some companies (and also my checking account).
So the impact of a Greek default on sovereign debt is less than the apocalypse and certainly not one sided.
Finally, does anyone in their right mind actually think that the strong economies of Europe will allow the experiment in a single European currency to collapse around their ears?
I think not. Such a divisive event would fly in the face of half a century of European history. It won't happen.
Options as a Strategic Investment is a one-stop source of practical information, clearly presented, about the the trader's most important tool for managing risk. This book occupies an important place on my desk.
Abbreviations:
psar - Parabolic Stop and Reverse
adx - Average Directional Index
pps - Person's Proprietary Signal
ma20 - 20-day moving average
macd - Moving Average Convergence-Divergence
mfi - Money Flow Index
sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
- trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
- adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
- psar, pps, macd: green for bull mode, red for bear
- sto: green for overbought, red for oversold, yellow for the neutral zone.
New to private trading? Here's a look at How to Become a Private Trader.
No comments:
Post a Comment