“Almost every wise saying has an opposite one, no less wise, to balance it.” — George Santayana
Last week, Wall Street felt like a slightly different market than it has felt like for much of this Bullish year. Whereas investors have mostly been shrugging off hints of bad news, generally viewing dips in the market as buying opportunities, there may be enough of a shift in sentiment that a more Bearish pattern, at least in the short term, may become predominant.
Friday’s unexpectedly weak job numbers would likely have impacted Wall Street with a shove to the downside had it not been a market holiday here in the U.S. The week had already been indicating a lack of buyers in general, and the sour domestic data in the employment numbers, which has been one of the strong sections of the foundation for the brilliant first quarter, likely would have sent even more investors scurrying for the exit, cutting losses and taking profits off the table.
However, that scenario never had a chance to play out, so we shall see if the next round of earnings reports will suffice to right the ship and help it stay the course.
The reading of the Fed’s Beige Book, due up this week, will no doubt be a little more scrutinized than usual, if that is even possible, due to all the perceived revelation that Bernanke won’t be waving around the QE3 pom-pom anytime soon.
In the event that the next round of earnings reports fail to motivate traders and investors alike, it is possible that all eyes will turn once more to the EU sovereign debt crisis and the realization that a good chunk of Europe is now either in, or heading towards, recession.
With red flags such as record highs in unemployment in the Eurozone countries catching more and more attention, a trend reversal may come into effect unless there are concrete indications that the Bulls should stay the course they found themselves on for the first three months of 2012.
What The Periscope Sees
Last week, the Periscope offered up a trio of euro-centric ETFs to play to the short side, for those who just happened to be of the mind that there was more on the way in terms of an increasingly deteriorating situation in the Eurozone. Certainly, since last week, little has occurred that would have resulted in a shift from a Bearish view of the Continent to a more Bullish one.
Therefore, we are offering up once again three ETFs that can be shorted to support that hypothesis. If options are your preferred vehicle, you can purchase some Puts to express a similar POV.
The three ETFs included last week, and re-presented for your edification and insight, are VGK (MSCI European ETF), IEV (iShares S&P 500 Europe 350 Index Fund), and EWP (iShares MSCI Spain Index Fund).
Full disclosure: The author does not personally hold any of the ETFs mentioned in this week’s “What the Periscope Sees.”
Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Daniel Sckolnik or Sabrient. Neither Daniel Sckolnik or Sabrient makes any representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.