I hope you enjoyed the 4th July holidays which came just before Greece has voted to exit the Euro and default on its debt.
Most commentators agree this is the most pragmatic solution for Greece, and with it will come a degree of uncertainty.
So how will the market take the news? Well it depends on what mood the market is in! On the one hand it could be relieved that a decision has been made, but on the other hand it could be worried about what happens next, and could this lead to more instability with other weaker nations seeking to exit the Euro?
Looking at the SPY, DIA and QQQ you would bet on the latter, with those indices all near the lower levels of their multi-month ranges and their OVIs being more negative.
With that said, there are one or two stocks that are seemingly immune to all the uncertainty, but with many others looking vulnerable.
For us there is earnings season within two weeks, which makes us more selective, and the past month or so hasn’t given us the vastest of harvests in any case.
For me, I’m aware of what’s going on out there, but I switch off the noise and look to the information that has served so well up to this point. Right now that means a cautious approach and a bias to the downside, given that the indices look vulnerable and the OVIsi is negative.
In any case, with earnings around the corner and with all the uncertainty, a safety first approach is sensible, and we’ll keep our eyes out for obvious setups.
Talking of which, if you have FlagTrader, here’s a simple filter you could use today: Bear flags with OVI negative moving average. That filter will give you setups like: ABC, AKRX, CP, CXO, OVAS, PKG, RTN, SMH, UNP.
