This will certainly be a wild week for ETF investors as the Greek drama continues to unfold and a series of economic reports come in during the week.
At Wall Street Sector Selector we continue to feel comfortable with our inverse ETF and put option positions. Our Option Master Portfolio continues to be the top performer (and highest risk) with unrealized gains of +22.7%, +6.6% and +9.5% since positions were opened on June 7th.
On My Wall Street Radar
The S&P 500 (SPY) managed to stay above the all important 200 Day Moving Average and remains relatively oversold with RSI in the mid 30s and still well below its 50 Day Moving Average, while MACD
continues to indicate negative momentum.
A short term bounce here wouldn’t be a surprise, however, Friday’s action was relatively weak into the close and significant nervousness prevails as the Greek drama will continue to unfold on Monday and Tuesday of next week.
Market internals remain weak and multiple point and figure sell signals exist in major sectors and indexes.
The Economic View From 35,000 Feet
Major U.S.indexes managed to eek out a small gain for the week to break six consecutive weeks of losses. Highlights (or low lights) of the week were:
ü Major problems, widely reported, with Greece
ü Italy’s credit rating was put under review by Moody’s for a potential downgrade due to potential problems with its debt and growth outlook
ü May retail sales declined -0.2%
ü June Empire Index declined -7.8 compared to +11.9 previously
ü June Homebuilder’s Index declined
ü June Philadelphia Fed declined to -7.7 from +3.9
ü June Consumer Sentiment declined to 71.8 from 74.3
ü International Monetary Fund cuts U.S. growth rate projections for 2011 to 2.5% and warns of dangers in the Euro zone and that the U.S. needs to address its deficit situation
What It Means for Stock Market and ETF Investors
What this all means for investors is an increasingly treacherous environment with big picture disputes at home and abroad coming to a head within the next few weeks. Interestingly, leading ETFs (featured below) continue to centre around Treasury Bonds as the flight to safety trade continues.
The Business and Financial News Week Ahead
Next week the Greek drama will continue to unfold as their Prime Minister takes his new cabinet for a vote of confidence and they have to continue their work to meet the austerity demands to receive more bailout money as riots continue in the streets.
Furthermore, we’ll hear from Dr. Bernanke and the Fed regarding interest rates and on Friday get another revision to 1Quarter GDP which will be critical to future market direction.
Tuesday: May Existing Home Sales
Wednesday: FOMC interest rate announcement,
Thursday: Initial Unemployment Claims, Continuing Claims
Friday: 1Q GDP Revision, May Durable Goods
Leaders: (NYSEArca:TLH) iS hares 10-20 Year Treasury (NYSEArca: IEF) iS hares 7-10 Year Treasury
Laggards: (NYSEArca:(EWD)Sweden (NYSEArca: EWI)Italy
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