Originally Posted by Hisam135i
Good article just posted on yahoo finance:
I was having a discussion about this earlier in the week with someone else. I believed that the risk associated with a Greek exit was contagion onto Spain and Italy, and not the actual exit of Greece itself that would be the cause for panic. The elections were supposed to, in the event Syriza won, push Spain and Italy off the cliff and cause panic.
But that's already happened, we've already dropped 1000 points on the Dow from Spain's rising yields, and now they've hit 7%. Check. What I'm concerned for next week is Italy, as I see that as the next reason to go down, not Greece elections. This week we got a prelude to what would happen with Italy, when it's bonds hit 6%. Remember when Spain did that? This is the contagion from Greece already at work.
The upside into the predictions currently is that markets will not be concerned about Italy's yields till early next week or sometime next week. But when that is realized, we will be headed down. They already tried to bailout Spain, and no avail. Try that with Italy and see how far you can go. It will be Italy's yields that bring us down, IMO, and not Greece elections.
How far up this thing goes, it could be as high as from now, 1342-1370. I'm going to keep adding into shorts all the way up. That's my strategy for now. I'm not even going to play the upside, as I and no one else I know and talk to, has a clear target for an upside. But the downside is very evidently coming soon.
Safe trading everyone!