Usually the sharp drop in the early morning from European sellers bottoms out around 10 – 10:30. Today, each little attempt to buy low was met with further selling.
There are likely two reasons.
1) US stocks have no real correction since their run started in October and are now overbought short term
2) Worries that Greece will not get the “vopluntary” participation they need in the offer they made to private creditors by their deadline Thursday afternoon our time
As I wrote in this month’s newsletter coming out in a few minutes, I think the most likely scenario is for them to extend the deadline. I doubt they will get full participation and probably will have to force the remaining creditors to accept it, which would like be considered a default. That would not go over well in Europe and so stocks are down there and here on that fear. In other words, contagion is back on people’s minds again unless they see a fully accepted deal. Don’t count on it.
Oil is down 2%, gold is down 2%, stocks are off 1.5% and bonds are also down slightly. The main things up? – the volatility index (aka: fear index) and the US dollar.