Dow is being attack at 13000 after Greek package

(Posted Tuesday in Singapore, 1120 AM, UPDATED 0625PM )

The Dow and S&P is seen testing the resistance level of 13,000 (broken) and 1370 respectively - 3 points short! The US markets open higher, fell below the flatline and is seen testing the resistance level before lunch. Traders should follow the Dow theory before making a decision. Earlier in the day...

 

The much awaiting had been annouced (from CNBC first) after an extended meeting (The annoucement/meeting was delayed 6 1/2 hours!). The most important point is that there's NO default. Whether there is a rally is NOT that important.

Click CNBC for details.
Click Marketwatch for details.
Click Bloomberg for details.

The (release of the) news does NOT guarantee a market rally! Let's see how Asia, Europe and the US would react with this news in Equities, Forex and other high yield assets.

Asia/Pacific equity markets are mostly in the red with the exception of Oz, New Zealand, Thailand and Indonesia. Click here. One possible reason why the market may not be rallying, click here. Mumbai opens with a 0.3% gain. Asia Pacific markets closed mixed with S. Korea, Taiwan and Japan in the red.

Europe open mixed and traded in the red with an average of 0.5-1% losses for most of the day before closing.

The market reaction that follows depends on

• how markets HAD been building up prior to the European meeting,
• hopes and speculation of a 'done deal' and
• investors mindset following the release of the news.

The Euro is volatile! It touched and broke the day low upon the release of the news and subsequently tested and broke the high at 1.3290 resistance. At point of writing, the Euro and commodtiy currencies are in the red, also.

It looks like prior to the meeting, the markets were rallying on hopes which explains the rally last week. How long will this rally last? Once the deal (news) is done, the market is finding new source of information to look for the next trend.

It looks like, we'll just have to wait and see how the US reacts to the Greek package and show us the way for the next trend. Note: The US had not reacted to the Chinese RRR rate cut as they were close for President's Day. Last week's data on Retail Sales was very disappointing!

That'll be all for the day until the next event - Europe's 2nd LTRO scheduled Feb 29th 2012.