Intraday Market Thoughts

Moody's Downgrades Greece to Caa1, Mkts Slump on US Data

by Ashraf Laidi
Jun 1, 2011 19:49

Moody's has just downgraded Greece to Caa1 from B1, taking the country to a new level of JUNK status saying there are increasing risks that will fail to stabilize its debt problems. S&P500 down 1.8% trading at 1320, below its 55-dma of 1326, after risk appetite took a double hit from poor US ADP (38K vs exp 175K) & disappointing US manufacturing ISM (53.5 in May vs exp 57.6 from 60.4 in April). The bulls will need S&P500 to hold above its 100 dma (now at 1317). Last time the index CLOSED below its 100 dma was in March but that coincided with the bottom of the latest ...

... but that coincided with the bottom of the latest cyclical run-up. As for the 55dma, the S&P500 closed below it for 3 consecutive days but NEVER closed the WEEK below it (yes, we can emphasize WEEKLY closes relative to DAILY moving averages).

Wednesdays Premium piece was posted AFTER the disappointing ADP but BEFORE the dismal ISM. As a CAUTION ahead of the ISM, we warned subscribers of a potential disappointment in the survey, by taking short positions in AUDJPY and FTSE100, both of which were hit (FTSE was hit at the futures value after the close of the cash market). Our longs in equity indices and yen pairs remain intact (stops not hit), while our protective shorts (short FTSE100). See Wednesdays Premium Intermarket Insights piece here:



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