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Weakness Continues as Fear Finally Appears in the Market

|Includes: DIA, FAS, FAZ, IWM, PowerShares QQQ Trust ETF (QQQ), SPY, VIXX

Yesterday’s action turned out to be a one day wonder as the market gave back all of yesterday’s gains and then some. Crude oil was a big loser dropping more than four dollars, fueled by weak economic data and issues in Greece sellers were out in full force. The downtrend continues as prices weren’t able to turn around as selling just continued to put pressure on stocks. Volume soared across the board as institutions were back out selling stock. Fear did creep back into the market as the VIX jumped almost 17%, but it remains well below levels seen in March. Until the VIX really jumps, above March’s level a significant low still is a ways away. Another weak day and it goes to show cash is king and waiting patiently for a proper setup is ideal.

The stock market is real weak. The NASDAQ is now below its 200 day moving average. A terrible signal for the entire market and we do not see any signs of conditions improving. We’ll need to get climatic selling in the market to market any sort of significant bottom. Oversold conditions remain and again, like yesterday bounces will occur, but we aren’t going to get giddy unless we have climatic selling. In addition, we’ll need to see a new crop of leaders form and begin to hammer out primary base formations. Stay patient and stay away from trying to become a hero.

Fears over the Greek situation continue and helped gold, silver and the dollar. The dollar can be described as “the tallest midget,” but is viewed as a temporary safe haven. Gold and silver will be sought after as any hint in political upheaval will always send investors to the precious metals. Gold is holding up and is holding up better than silver. However, it has yet to flash a buy signal for us. With that said, until another round of easing gold will still lag our stock market leaders.

Stay patient here and when conditions improve that is when we will take advantage.