Greece Buys More Time
Greece handed 18 billion euros ($22.6 billion) to its four biggest banks on Monday, an official said, allowing the stricken lenders to regain access to European Central Bank funding. But this is only buying a bit more time in our opinion.
It seems very likely that with the Euro currency hitting new lows almost every day, increasing banks runs, and with no credible solutions in the near term for the Eurozone countries, Greece will eventually exit the Eurozone to be on its own.
And, unfortunately, the financial system will be forced to brace for a potential “Lehman Brothers-like” shock if and when that happens. It has the chance to kick off a domino affect even though its failure by itself could be covered monetarily.
Many are now predicting a certain worldwide recession in the near future and Spain’s debt is nearing a very dangerous level according to financial experts. It is not clear how their debt problems or Italy’s will be handled due to their enormous debt size.
The European politicians and the ECB need to act very soon if they want to help lessen the severity of what could be another financial collapse later this year or in 2013. It is hard to predict at this point how it would compare to 2008 but it definitely will crush investors with too much equity exposure. It is not too early to start playing defense, raising more cash, and reducing equity risk.
As long as the Euro currency keeps falling and Europe has bank runs, stock markets are at a huge risk for a big selloff. It could happen anytime, it could involve a massive down day, and the depth could be 10% to 30% or more if the right safety measures by the world’s central banks and funding organizations aren’t taken.
Once again, the short term upside could have a bit more to go based on the Greek bank bandaid and an oversold bounce. But, in our opinion, investors should take this opportunity to sell into any strength and to lighten up on equities. Traders can continue to look for some select longs for a few days or short sells for the next few weeks or longer.
The recent market bounce is more of a technical relief rally (“dead cat bounce”) until proven otherwise. It could still move higher towards 1,340 but our lower target for more weakness in the next few weeks and into June is the 200 SMA near 1,280.
Power Stock Picks
MR is moving back to shorts after this brief bounce. Here are a few ones worth a look.
MR believes gold prices below $1550/oz, silver prices below $28/oz, and WTI Crude Oil at less than $90/barrel offer long term investors a good buying opportunity. Scaling in slowly on more weakness is reasonable with hold periods of 12 months or longer.
The caution alert for retirement accounts and investors is still present. Selling some equities to protect gains in case of more heavy selling is prudent at this time, especially if you can take advantage of selling at higher prices during a market bounce. Make sure to be ready to sell even more in case the Euro completely unravels and takes the markets down hard.
To get our weekly TOP stock and ETF picks and detailed market commentary automatically sent to your email, enter your name and email address in the form below.
Check out our newest FREE promotional offer called the MR Market Crusher Pack for 2012 (click link). It includes 5 very valuable investor products worth $600 to get you started with a bang in 2012 for your retirement account.
Investors can take advantage of our best investor services in our premium Gold Investor Membership. Get access to the top Momentum Rider investor portfolios, Special Reports, and stock picks by trying it out risk free for a few months. Get instant access now to the MR “Gold Investor Membership”… get more info
Good luck in your trading and investing,
This BLOG POST is brought to you by the publishers at Jalexa Trading Consultants, L.L.C. Nothing in this post should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. Any investments recommended in this blog post or through any of its advertisements should be made only after consulting with your investment professionals and only after reviewing the financial statements of the company or investment.
© 2012 Jalexa Trading Consultants, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the internet), in whole or in part, is strictly prohibited without the express written permission of Jalexa Trading Consultants, LLC.