Déjà vu all over again

July 12, 2015

Weekly Market Outlook

By Keith Schneider

outlook20150713Whether or not you are a Yogi Berra or Bill Murray fan, there is no mistaking that if it feels like we all have been here before. There is good reason. In case you might have forgotten, let me jog your memory as to why. Another weekend will go by with global markets on edge, waiting on whether or not Greece will exit the Euro, when or if Yellen will jack up rates, and whether or not the Chinese bubble is over or still hovering over the markets.

The US equity markets clawed their way back to basically unchanged after several wild multiple 2-300 point swings in the Dow Jones Averages. One difference from last week’s action was the big up move and closing on a positive note.

The rumors flying back and forth from Greece are at best inconsistent. As I write this article, the news headlines reported that the Greek Parliament did a complete about face and voted to accept austerity measures and the bailout. This was rejected in last week’s referendum.

Bondholders, led by Germany and Merkel, seem ready to deal with a Grexit. The Greek ruling party that just buckled had no backup plan. The Syriza (current ruling party) plan was to bluff the bondholders into thinking that a Grexit was acceptable to Greeks and hence get better terms from bondholders.  However, with the economy completely shutting down and no plan in place, they backed down.  In chess parlance it’s called a gambit gone very wrong.  Checkmate! The saga continues and the only thing that seems clear is that the whole affair is akin to watching a slow train wreck unfold.

The market volatility has certainly picked up and we certainly would not be surprised to wake up next week with that déjà vu feeling once again.  In terms of chart patterns there is a text book version of classic unfolding in silver right now called an Island Bottom which I will cover in this week’s video as well as the usual fare.