Last week of October, market staged a massive rally with the assumption that Euro-zone crisis was resolved for now. But before the dust could settle, Greece threw another curve ball and we were hit by a roadblock. Now everyone in Euro-zone is scrambling and trying to convince Greece to accept the bailout. Isn't this frustrating and at the same time ridiculous!!! Greece is already in deep trouble and cannot pay its bills. Euro-zone leaders came up with a financial bailout package for Greece in short term and entire Euro-zone for long term. But now Greece says "we will decide if we want to accept your bailout". An interesting fact is, no matter whatever happens, Greece will default now or in coming months. Accepting bailout will only buy more time for other Euro-zone members to avoid immediate damage to Euro currency. The moment Greece defaults, this event will trigger possible Euro-zone collapse as Italy & Spain are having their own financial troubles. The BIG question is when in time will this happen!!! We believe that Euro-zone will be able to buy some time by forcing Greece to accept the bailout for now, as it might seem like the best route for all. All this uncertainty means only one thing for us, bumpy road ahead and all we can do is watch for trouble signs. Lets focus on the charts: From BPNYA chart below, we are in "wait n watch" mode as no signals are triggered last week. NYSE chart below shows, how this market is slowly creeping higher (not climbing) in-spite of hiccups like 2 steps forward and 1 step backward. This theme might continue until mid November after which investors focus will be on US debt reduction effort and another round of tug-of-war between democrats & republicans. Without a concrete action, a downgrade is inevitable which means market will start next leg down. But before next leg down, market may peak above 200 day MA (red line). This might be a BULL trap to suck in more people as market waits patiently to penalize maximum folks. We will find out in time.... For now, stay alert and be ready for hiccups...
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