Greek elections are a big concern to traders and there is no certainty that the outcome of the elections will favor the pro-bailout party. Hence the jitters today. Spain may be an even bigger problem as the yields on its ten year have spiked to 6.75% a very unsustainable level.
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These events in Europe are combining to form a perfect financial storm if this weekend see's Greece leave the Eurozone. These jitters should continue through the end of the week.
Another round of economic report comes out tomorrow in the U.S. with the focus on jobs. I know I sound like a broken record, but if jobs disappoint the SPY and the market overall, will react negatively. Then on Friday Industrial Production and Michigan Consumer Sentiment will come out, the one to focus on will be the sentiment report, as the economic environment has slowed consumers will not be as optimistic and the numbers show over the last 4 months we have seen a steady drop in confidence. This combined with jitters in Europe could have the markets significantly down by the end of trading Friday.
The SPY is in an interesting technical pattern. Having had the rally last week we have formed a pennant that will break out tomorrow. However, a break up does not signal anything bullish because resistance at $134 has been very strong. I do think that a break below the pennant tomorrow will test $130 support by the weekend.
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Disclaimer: This article is intended to be informative and does not constitute a buy, hold, or sell recommendation., and should not be construed as personalized advice as it does not take into account your specific situation or objectives
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