Courtesy of John Nyaradi.
After days of wrangling, Greek political leaders agreed to new austerity and markets yawned.
Greece made an 11th hour seal with the “troika” to cut costs further and impose greater austerity programs in its bid to get another round of bailout money, but even as the announcement was made, grumblings started as to whether the terms were enough to meet the conditions for the next bailout.
But investors greeted the news with caution, even skepticism in today’s market action.
The Dow Jones Industrial Average (NYSEARCA:DIA) gained +0.04% for a virtually flat day
S&P 500 (NYSEARCA:SPY) added 0.13
Vanguard MSCI Europe Index (NYSEARCA:VGK) added 0.07%
Currency Shares Euro (NYSEARCA:FXE) Trust tracking the Euro Dollar gained 0.2%.
IPath S&P 500 VIX Short Term Futures (NYSEARCA:VXX) jumped 4.8% as the VIX, the CBOE “fear” indicator added 2.8%
So on a day that should have been a big rally and a decline in “fear” and the VIX, what happened?
Investors remain nervous that the Greek deal might not be enough to win approval from the European Union and then after Greece, everyone wonders if markets will turn their focus on Portugal, Italy and finally Spain.
Furthermore, technical indicators point to severely overbought conditions in all major indexes.
Bottom line: Greece is off the table, for now, however, Portugal remains a question. Most importantly, technical indicators point to the significant possibility of a measurable correction just ahead. VIX, the CBOE fear indicator, as measured by the iPath S&P 500 Short Term Futures ETN (NYSEARCA:VXX) confirms this sentiment by rising on a day that should have seen fear coming out of the markets.
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