Will the weekend events cause a "Grexit?"
This week has been another roller-coaster ride between China and Greece, not the ideal activity for non-directional traders. The high/low ranges for this week on SPX have been:
- Monday: 21 points
- Tuesday: 39 points
- Wednesday: 33 points
This morning's gap brought SPX up to a high so far of 2074, it has now dropped back about 10 points so it appears the wild ride isn't over yet. The chart below gives a visual:
SPX 6 month chart
Everyone was anticipating a settlement on the Greek situation this week, but it now looks like Sunday is the latest deadline. EU ministers are scheduled to meet again on Saturday and review a Greek proposal, assuming they have actually presented one by then. Multiple EU heads said if there is no "satisfactory" proposal and agreement with Greece by Sunday the EU will proceed to Plan B. While that has not been defined in the press, it is widely assumed to be a Greek exit from the Eurozone. EU Commission President, Jean-Claude Juncker said, "I am strongly against a Grexit but I cannot prevent it if the Greek government does not do what is asked of it."
For those of you who have followed the Couch Potato newsletter, you will understand that there are occasionally weeks when I feel it is too risky to enter a short term position such as the SPX weekly Iron Condor. Last week we did not enter a weekly position, and I am recommending sitting on the sidelines once again for the next weekly cycle (July).
The year-to-date results for the weekly Iron Condor have been very favorable, and are posted below:
SPX Weekly Iron Condor 2015 Results
I understand if some of you are disappointed that there will not be a new trade recommendation tomorrow, but as a full time trader I feel it is sometimes better to hold my hard-earned cash as my position and let the geo-political events settle. I ask for your patience during these volatile times, and we will hope the weekend brings a resolution one way or the other so the Greek people can get on with their lives.
We are planning to enter the SPY Iron Condor for August next week; I will re-publish those guidelines in my weekend update.
As always, stay keen on your risk management and trade carefully,