This weekend, in my Market Forecast, I mentioned that we may need to see a couple of days of consolidation. We saw some of that on Monday. But, no one expected the Greek Prime Minister Papandreou to come out and invoke a referendum, which could jeopardize the deal made by the European countries just last week to help Greece from defaulting on its debt. Overnight, European stock markets fell, and the US market gapped lower at open.
Financials were hit the hardest: GS -5.49%, MA -3.73%, BLK -4.94%. FAZ, the fianncial 3x Bear ETF, popped more than +13%. Technology shares dropped sharply: PCLN was down $18.7 and GOOG lost $14. Energy stocks pulled back as well: APA -5.52%, NOV -4.14%, DO -3.23%.
After the market, EOG reported a strong quarter and recuperated some of its loss during the regular session. CF also enjoyed a nice quarter, but, its shares were only up slightly this evening. JDSU beat its earnings estimate and its shares were up almost +5%. OPEN reported a quarterly report with mixed results, being light on the revenue; its shares dropped 14.55%.
The Dow was down 297.05 points; SPX fell 35.02 points; Nasdaq dropped 77.45 points:
OIH (oil services) fell 4.6%. XLE (energy) was down 3.23%. XLF (financials) shed 4.71%. FDN (internet) lost 2.96%. MOO (agriculture) declined 3.08%.
SPX lost 35.02 points to close at 1218.28. It closed at its 20-day MA. The MACD went down.
Nasdaq tumbled 77.45 points to close at 2606.96. It closed just below its 20-day MA. The MACD also went lower.
VIX, in 2 days, popped from 25 to above 37 and closed near 35. It is certainly irresponsible for the Greek Prime Minister to make such an announcement without first consulting with his European counterparts, especially when other European leaders worked so hard to get banks to agree to write off 50% of the Greek debt. Naturally, the financial markets fell sharply on such uncertainties. Unless we see an equally sharp rise in a day or 2, this drop could take the rest of the week to work off. With VIX back into the mid-30s, we could be back to fast-swing market environment again! We're holding lots of cash and trading lightly until there's more clarity.
Good night and HappyTrading! ™