9:00am
We came into the week thinking the bulls would have the upper hand as we were betting on a few heavy-hitters in Tech to beat earnings estimates and better-than expected economic news to carry them to another weekly win. What we didn’t expect was the heightened drama Greece would cause which snapped the market’s 4-week winning streak.
Monday started off with hesitation on if Europe’s plan to solve its financial crisis was legit. Although we expected a pullback, we didn’t quite pencil-in a 2% drop to start the week. The good news was the bulls were able to hold the first layer of support but it wouldn’t last.
Tuesday was much of the same as the bears pushed the next layer of support with another 2+% drubbing. The Dow finished below 11,800; the S&P 500 slipped under 1,225 and the Nasdaq was within spitting distance of giving up 2,600. Although the indexes were “stretched”, we saw a little fight in the bulls and had a good feeling the bears were just about done with their bull rush.
Wednesday was a rebound day and we used Tuesday’s weakness to open a few more call option trades. The ADP numbers came in above expectations and Qualcomm (QCOM, $56.50, up $0.39) surpassed Wall Street’s earnings estimates. Ben Bernanke also gave the bulls a little ammo as he said the Fed would consider the purchase of mortgage-backed securities “under the right conditions”. This trio of headlines helped the bulls recoup much of Tuesday’s losses.
Thursday was shaping up to be a disaster as Greece said it was considering a referendum to the bailout and was threatening to leave the eurozone. Futures were pointing towards a major breech of support but cooler heads prevailed by the time the U.S market opened. Greece PM George Papandreou appeared to be on his was out the door after opposition party leader, Antonis Samaras, called for a no confidence vote scheduled for midnight Friday. Despite the back-in-forth bickering, the bulls were able to advance the market another 2% and went into Friday’s action still down, but not out.
Futures were lower before Friday’s open despite Greece saying they would abandon the referendum as a mixed jobs report and the G-20’s unwillingness to throw money Europe’s way kept things in check. By the end of the day, it was clear Wall Street was taking a wait-and-see approach on the fate of Greece’s Prime Minister.
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