Will Greece Take Us Higher?

It appears the New Democracy party has won the Greek election, and the initial Euro reaction has been positive. The crisis in Greece isn’t over yet, nor has the country completed its objective of creating a sustainable government. However, for the time being it appears the news is likely to be positive, as New Democracy was viewed as the party that was more pro-bailout compared to its leftist competitor. We still have the FOMC to contend with this week, providing another potential catalyst for a volatile market.  

Looking at the charts, here’s what I’m noticing… The volume I was hoping to see on June 14th seems to have been provided, with a breakout (green circle) in the On Balance Volume indicator.  

The percentage of stocks trading above their 50-day moving average has been steady rising in various indices. With 43% of the S&P 500 above their 50-MA, 60% of the Dow, and 38% of the Nasdaq. I’ve also noticed the Aussie dollar has been producing some nice gains, up almost 4% from its May low, which has historically been positive for U.S. equities. Bullish volume has been picking up, a positive ‘risk on’ sign.  

The next point of resistance I’ll be watching will be the 50-day moving average. If the market gets favorable comments out of the FOMC, the 50-MA might not be too high of a hurdle for S&P 500 to jump. Time will tell.  

The momentum and volume divergence I discussed back on June 5th when the S&P 500 had hit a (so far) bottom seems to have worked out pretty well. We’ll continue to keep on eye on Europe and the FOMC this week but it seems the storm clouds have partially cleared for the moment.  


Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.