By Scott Freeze
We all awoke after the Memorial Day holiday to an exploding futures market and the “great” news that Greece will not default. It seems to be full steam ahead for the markets, but why? Are investors certain this isn’t just a one day head fake to make people believe that things are getting better? I don’t see it.
The Greek problem is not fixed. It is merely being prolonged and dangers to the rest of the EU continue to be prolonged. There are still numerous issues with the balance sheets in the EU, and investors seem to be looking the other way instead of delving deeper into the issues. How is Greece and more importantly, its bondholders, supposed to escape this problem unscathed? I don’t see any legitimate possibility for the EU or the companies holding Greek debt to not suffer greatly when this issue finally comes to a head. The S&P/Case Shiller composite is at 138.16 below the 2009 lows of 139.26. There is still a glut of bank owned homes that have to come to market, and demand remains low, so where does anyone see the housing market stabilizing, let alone recovering? States and municipalities continue to struggle with balancing budgets without mass layoffs or pulling public projects, and the fed is poised to exit the markets shortly.
So where is the good news? What is the reason for optimism? Granted, we have seen the market rally through bad news in summers past, but there seems to be too much headwind for the continued ascent of this market, and we expect the EU issues to finally come to a head this summer. SO, while keeping tight stops on long positions, we also encourage you to be very wary about what positions you hold for the second half. Global X Fertilizers/Potash ETF (SOIL), Global X Norway (NORW), Teucrium Corn Fund (CORN), Index IQ Agribusiness Small Cap ETF (CROP), Global X Fishing Industry (FISN) and Powershares Global Agriculture (PAGG) seem to be very efficient defensive plays in a falling market, and we anticipate these ETFs to be some of the best performers over the second half of this year. While the market has come down a bit, we feel the second half of this year will be very dangerous for investors and are looking for the EU situation, as well as the US economic conditions to come to a head and expect to see 2011 as a year of negative returns.Disclaimer: This publication is neither an offer to sell nor a solicitation to buy any securities mentioned herein. The information contained herein is based on data obtained from recognized sources that are believed to be reliable. Street One Financial LLC (S1F) have not independently verified the facts, assumptions and estimates contained in this publication. Accordingly, no representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions contained in this publication. The information contained in this publication is not and does not purport to be a complete analysis of every material fact respecting any company, industry, ETF or other security. Additional information concerning this publication may be available on request, if available. Many of the securities mentioned in this publication involve a higher degree of risk and more volatility than the securities of more established securities. For these and other reasons, the investments discussed in this publication may be unsuitable for investors depending on their specific investment objectives and financial position. Each investor should complete his orher own additional investigation and assessment prior to making investments in any securities. Transactions in securities mentioned herein may be effected only in those states where such securities are qualified for sale. Street One Technical Analysis LLC is an independently owned Company from Street One Financial LLC (S1F). S1F is an independent Company specializing in ETF’s, equities, and options. S1F specializes in agency ETF/ETP, equities, and options trade execution. On the ETF/ETP end, S1F may work with the ETF issuers to understandtheir products more thoroughly and how they can complement an investor's portfolio.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.