The Bears Are Back…But For How Long?

Global markets suffer steep losses as Greek fears continue.

The global sell off continued yesterday as investors around the world worried about the situation in Greece and the upcoming elections now scheduled for mid-June.

The day’s rout started in Asia where the Nikkei dropped -2.99%, the Topix declined 2.89% and the Hang Send fell 1.3%.

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As morning came to Europe, the declines continued with the Stoxx 50 dropping -0.1%, the FTSE 100 shedding 1.3% and the DAX slipping 0.6%.

On Wall Street, the U.S. stock markets closed out a dismal week, the third dismal week in a row, with declines of 0.59% in the Dow Jones Industrial Average (NYSEARCA:DIA) while the S&P 500 (NYSEARCA:SPY) gave up 0.74% and the Nasdaq (NYSEARCA:QQQ) dropped 1.24%.

Other notable moves in exchange traded funds were Vanguard European ETF (NYSEARCA:VGK) declining 0.37%, iShares China FTSE 25 Index (NYSEARCA:FXI) losing 0.57% and iShares MSCI United Kingdom ETF (NYSEARCA:EWU) falling 0.95%.

The widely watched Facebook IPO (NASDAQ:FB) largely fizzled but still created a raft of new billionaires and millionaires even in the face of slowing revenue and growth.

For the week, the Dow Jones Industrial Average (NYSEARCA:DIA) retreated 3.5%, the S&P 500 (NYSEARCA:SPY) slipped 4.3% and the Nasdaq Composite (NYSEARCA:QQQ) fell 5.3%.

The G-8 meets this weekend in Camp David and certainly Greece will be at the top of the agenda while newly elected French President Hollande and German Chancellor Merkel will have another opportunity to get to know one another and see if they can find some middle ground over how to handle the ongoing European debt crisis.

This week’s action brings markets back to levels last seen in mid-January and several sectors are now approaching their respective 200 day moving averages which are widely seen as the demarcation line between bull and bear markets.

The S&P 500 (NYSEARCA:SPY) itself now stands at 1295 with its 200 day moving average at 1278, just 1.3% below today’s closing levels.

Bottom line: Global markets swoon over Greek and Euro Zone fears with no resolution in sight as the June elections in Greece rapidly approach.  Market technical indicators now approach significant layers of support, including multiple 200 day moving averages, which should offer a floor to recent declines and the potential for a rebound within the context of this current down trend.

John Nyaradi is the author of The ETF Investing Premium Newsletter.

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