Today’s the markets are taking a hit because of
the news out of Europe that the negotiations
with Greece have fallen apart.
Seems like old times again, doesn’t it?
The fragility of this market does not need a big
new story to help it sell off.
But, really is this that big of a story?
If Greece defaults, does that really put the euro
I don’t know. But it seems like such a small
country compared to the whole EU.
But, once again it does remind that you have to
be careful in these markets.
It will be interesting to see where the S & P 500
closes today. With the news out of Europe,
the S & P was down almost 22 points and
has now pared half those losses.
For me, I am looking at the VIX. More specifically,
I am looking at the 15.63 level on the VIX.
You see, last week the VIX made two attempts to
get above that level.
On Tuesday, it failed and headed lower.
At that point, the S & P 500 proceed to rally 43 points.
Today, the VIX is back to retesting the 15.63 level.
As I write this, the VIX is trading at 15.48, just under
the 15.63 level.
If the VIX continues above 15.63, the markets should
If it cannot get through it, then the markets should find
support and head up.
This week there is the FOMC meeting that concludes
on Wendesday, with a statement at 2:00 EST.
Will the Fed raise rates during this meeting?
That is what everyone wants to know.
I tend to doubt they will. But, the rates have been jumping
and trading as if the Fed will do just that.
And the damage to the high yielding stocks has been
I actually welcome this pullback because it gives you an
opportunity to buy a higher yield at a better price.
Take HTGC for example. HTGC peaked out at $15.61
back in the summer of last year.
Today, it trades for $11.79.
It pays a $.31 per share quarterly dividend. At $15.61, the
return is 7.9%.
Trading at $11.79, the return is now 10.5%.
Because of the price drop, the yield has increased over 30%.
I hope it drops more.
Just my thoughts for today.