Thursday, February 11, 2010

Euro Tanks On Potential Greece Bailout

The market is lower this morning, mostly on what looks like a strong dollar and weak financials. Commodities look firm, even in the face of the dollar's rise.

There have been reports out this morning that the European Union has reached a deal that will provide financial aid to Greece, although no details have been provided. The news is causing significant weakness in the Euro, and strength in the dollar, due to speculation that any aid to Greece will cause Spain, Portugal, Ireland, etc. to get in line for their handout next.

In economic news, jobless claims came in below expectations, while continuing claims hit their lowest level since December 2008. So that is a bit of good news.

Asian markets were higher overnight. One report showed an unexpected slowdown in China's consumer inflation during January.

Oil is flattish near $74.50, while gold is bucking the dollar strength and rising to $1079.

The 10-year yield is higher to 3.72%, and the VIX is flat at 25.40.

Trading comment: The market has not been able to realize the lift that I had been expecting for this week, coming off that oversold reading. We still have a few more days to see what happens, but unfortunately, the market seems to be moving away from that oversold condition without any upside progress. Sometimes just consolidating sideways can relieve and oversold (or overbought) condition.

Away from the technicals, bearish sentiment has really been on the rise lately, and that could be a more important factor at some point. Most of the sentiment indicators I follow have moved back to the bearish levels that helped the market bottom last July and October. I think what we really need is some catalyst, now that corporate earnings season is essentially over. I'm just not sure what that potential catalyst is at the moment.


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