Over the past few days I have already stated my position with where the market stands. The closer we get to the default/no-default vote, IMO, the clearer potential actions become.
The SP500 is sitting near its 1250 support, while the shorter trend SMAs are coming down. Basically, the market is finding a base here.
If Greece rejects the austerity, there is a sizable gap toward the next level of support. The recent chatter has caused me to take on protection. Re-enforcing the concept of protection was Sheila Bair stating in a speech last night that 'you just need to bite the bullet sometimes' and restructure. The willingness on her part to accept the restructuring as a course of action I think suggests the contagion fears are overstated. And while Bair and Dimon differ on the concept of capital requirements, it appears they agree on the potential contagion fears of a default on Greece.
So if a rejection takes place, the SP500 probably has about a 5% move lower, where we will see a huge spike in the Vix. The combined set-up, lacking sizable systemic risk and minimal effect on the global economy, will have an awesome buying opportunity.
With the dust settled, I still think we can get a rally to the 1300-1350 level by year end if there is a no-vote on austerity. (Of course this assumes the US debt ceiling is raised.)
If the SP500 approaches the 320SMA, I will look to add a bunch of names, but a few in particular. (ie IBM, ITRI and POT)
IBM - This is my second largest position, AAPL being the largest. Cramer had a good rant on it the other day. (But I would like to point out that I was behind IBM well before Cramer :)
Now is actually a good time to enter IBM, assuming the austerity gets passed.
ITRI -I really like it here due to its prospects over the next few years. Once the Smart-Grid gets standardized, ITRI will see very nice growth. But if the market goes down, an opportunity to get this thing below 40 is really possible. I will be purchasing this name upon a market decline.
Post a Comment