Do not under estimate the speed with which this market sentiment has changed. Last week Citi raised its probability of a Greek Euro exit from 50 to 75%. Now everyone is starting to take notice. Zero Hedge posted a piece from Citi's Willem Buiter from 2011 (link at end of this post), discussing the potential implications of a Greek Euro exit. What I found striking was the similarity between what Citi was saying then, and comments Art Cashin has made of late with respect to the topic. It is merely that the awareness of such an exit from the Euro currency would cause a run on the banks by Greeks looking to recover money before it was converted. Such a bank run, as Cashin pointed out, could spook the most sickly Euro debtor nations, and cause bank runs there.
Its all setting up nicely for the story the long term gold bulls tell, but I believe there is selling to come. People will sell whatever they can to fund their margin accounts and gold, the so called "broken story", will be on peoples' liquidation radar. We will continue to watch the market, but it is too early to stick your neck out and get long. Those who try to push the market know which way will be easiest to push.....and its not up. The risk reward for being long any risk asset is unfavorable. The "we've been down so many days in a row it has to change" logic will cause a lot of pain. There is something brewing in this market, but you will get a chance to get back in on the way up. You might not be so lucky to exit quickly on the way down.
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