Despite the eurozone coming to an agreement in principle last week to resolve their lingering debt crisis, Greek Prime Minister George Papandreou called for a vote late Monday of the Greek people, which was not part of the deal. This move has shocked the European Union and the markets to boot. In October the U.S. markets enjoyed one its best performing months in years with all of the major averages posting double digit percentage gains on the month; Dow Jones Industrial Average (chart), S&P 500 (chart), Nasdaq (chart), Russell 2000 (chart).
With the run that the markets enjoyed in October, it was inevitable that a healthy pullback would occur. However, I don’t think anyone expected that the pullback would happen in the first two days of this week.
Between the ongoing saga across the pond and the computerized trading models that have seemingly taken over trading desks, my friends volatility is most likely here to stay. That said, if you participate in these markets do not forget two of the top rules of trading or investing, and they are, define your risk in every trade and always use protective stops. Good luck to all.
Have a good day.