Here we go again: Futures look very weak, with the Dow indicating a drop of 175 at the open.
The cascade is weak Euro (Greek related or not). The soft EU currency means a strong dollar, and that is pressuring Gold, Oil, and stocks. The 200-day moving averages have been minor support, but indices (Dow & S&P500) are in spitting distance. If we open where the futures suggest, we are blow right through them.
As noted yesterday, watch the May 6th intra-day lows—especially the volume as we approach that level.
I honestly don’t see what the Greek riots have to do with equities—despite the usual chatter. This has been going on for 6 months—why the sudden impact now? The good visuals make for good TV, but lousy equity strategy.
More likely, market weakness is based on other factors: We are sitting on top of 70%+ gains; mutual fund managers are all in, impacting liquidity; Supply is in control over Demand. Overall, the market simply looks tired.
Once again, with markets just a few weeks from their 18 months highs, I have to ask: Can you really believe equities “forecast” anything?
I find it so much more accurate to say they are a future discounting mechanism, one that reflects a million monkey’s probalistic expectations of future events. Often right, sometimes wrong, occasionally spectacularly so. But a leading indicator that accurately forecasts the future? Don’t make me laugh…
Originally published at The Big Picture and reproduced here with the author’s permission.