The Market Dodges A Greek Bullet

by on June 29, 2011 | ETFs Mentioned:

This week saw stocks go on one of their best winning streaks in recent memory as the S&P 500 gained close to 3.1% since the market opened on Monday. Most of these gains came as traders and investors alike bought up securities ahead of the Greek austerity measure decision on Wednesday, assuming that Athens would vote in the plan. Traders were proved correct on Wednesday as the austerity measures squeaked by with a five vote margin, allowing Greece to obtain another tranche of capital from the EU in order to avoid default–at least for the time being.

Closer to home, issues regarding a potential American debt crisis could soon move towards the forefront as a deal to raise the debt ceiling is still elusive. Time is running out for the U.S. to raise the level before a default event happens later this summer and many are growing increasingly worried that the two parties will not be able to resolve their differences in time. As a result, many traders are slowly moving out of some T-Bills thanks to this risk of a catastrophe, preferring to venture back into risky assets for the time being–at least until the U.S. gets its fiscal house in some semblance of order.

With these developments taking shape, some of our ETF plays from Monday have done well, while others were hit hard by a greater appetite for risk. That was something that we were not anticipating for the most part, especially considering the large risks that remain in both the U.S. and Europe. Nevertheless, you can’t fight the market: we took this as an opportunity to shift some exposure in our all-ETF portfolio in order to better position ourselves for the weeks ahead:

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