Before the Open (Nov 25)

Good morning. Happy Friday. Hope you enjoyed your day off from the market.
While the US market was closed yesterday, most of the world indexes dropped. Today is a new day, and it’s more of the same. The Asian/Pacific markets closed down across the board. Australia, Hong Kong, India, Indonesia, Malaysia, Singapore, South Korea and Taiwan are down 1% or more. Europe is currently mostly down. Austria is down more than 2.7%; Stockholm is down 1.1%. Futures here in the States point towards a moderate gap down open for the cash market.

Italy’s longer-term borrowing costs have crossed a threshold many believe to be unsustainable, and the interest rate to borrow for 6 months jumped to 6.5% – twice what it was compared to last month. When Greece was in all the headlines, not many seemed to care much about Greece, they just wanted to know the situation would not domino throughout Europe and the rest of the world. Well, I don’t think the situation in Greece has caused problems elsewhere. Italy, Spain (and now France) would have been in trouble regardless. Greece was not hard to deal with. Spain and Italy are too big to simply bailout. France obviously is too big. Either massive amounts of euros will need to be printed (causing huge inflation) or these countries will be allowed to fail, and it’ll take a entire generation for them to be major players on the global stage again. Interesting times we live in.
The US market has been down 6 straight days and 7 of 8. As of a couple days ago, the pullback was no longer a dip within an uptrend. The indexes broke out in late October but only followed through for a couple days. After 3 weeks of consolidation, the weight of Europe finally took a toll. The index charts no longer look good, and charts of individual stocks look terrible. But with so many consecutive down days, chasing short here may not be wise. My fear (I admitted this earlier this week) was that that market would just melt down and never bounce to give us a chance to go short. That’s what happened in July/August. The market dropped 10 of 11 days and didn’t give traders a second chance to go short. Oh well. We’ll see what happens. There’s always another day and another trade, and if things completely unravel like they did in 2008, the S&P has several hundred downside points to go.
I’ve been laying low, and at this point I see no reason to chase stocks lower. I wasn’t aggressive enough when the consolidation patterns broke down, so now I’m stuck hoping for a second chance to get in. More after the open.
headlines at Yahoo Finance
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers