Enthusiasm Over Eurozone Bailout Package Fades

The market looks to be back to its recent trend of the euro falling, dollar rising, and funds flowing into gold. This is the flight to safety trade, into the dollar and gold, and highlights that even though the bailout package for eurozone countries was sizable, it doesn't really resolve the longer-term issues these countries face.

Most of the S&P sectors are lower so far. The only ones that are flat today are utilities and healthcare, classic defensive plays.

The higher dollar is boosting commodities, with oil up to $77.50, and gold registering new highs for 2010 at $1225.

Asian markets were lower overnight, and European markets were lower this morning; the 10-year yield is higher to 3.56%; and the VIX is pretty much even hovering near 29.0.

Trading comment: I used yesterday's market strength to take some profits on a few trades I had added to on Friday, as well as to trim some of our emerging market exposure. I sold our India etf (INP), as I think inflation is running too high there and the govt. is going to need to tap on the brakes a little harder. I have similar concerns for China (FXI), but haven't sold that one yet.

Last week I also mentioned we added Green Mountain Coffee (GMCR), and that chart is looking more and more like a bottom. I think the market overall is likely in a trading range for now, and if we bounce further I will likely trim a little more, as I do think the chances of another pullback are elevated.

long FXI, GMCR