Don’t get used to the calm markets.
Market volatility is likely to spike again this year on excessive borrowing, demands for a higher debt ceiling, and abnormal shifts in economic growth, as a a breakup of the euro region isn’t out of the question.
You see, while the press is focused on the downgrades in France and other euro-zone countries, Greece bond negotiations are breaking down again, nearing absolute collapse.
That alone would send volatility through the roof, as markets clearly run out of patience.
While the S&P 500 has rallied quite nicely so far, it’s right back at overhead resistance. And it might be time to become a bit cautious on long positions. We’re stalling out around the 1290 line, which was support in mid-July 2011 before the market lost its mind and belly-flopped below 1,100.
