Stock Market Testy Tuesday 11,590 or Bust!
Stock-Markets / Stock Markets 2011 Nov 29, 2011 - 07:06 AM GMTBy: PhilStockWorld
To quickly summarize the news (see Member Chat for details), Asia was up but not all that much (around 2%) and Europe is up about half a point at 8am. Italy had a very expensive bond auction but at least people bought them just under 7% and they need that 7% because inflation in Belgium just popped to 3.85% in November.
Moody’s put 87 EU Banks on review (ie. downgrades coming) and Fitch put the US on negative watch and there are rumors that a French downgrade is imminent. Bets against the euro are at a 17-month high and Japan’s unemployment rate rose to 4.5% in October. On the whole, it’s not the kind of news that generally leads to impressive market rallies.
As you can see from the chart above – it’s pretty clear from the OECD Leading Index that Europe is already in a Recession – we’re just waiting for the lagging GDP results to catch up. That means we can look forward to strings of disappointing numbers and, so far, we can’t even get the EU to come up with bailouts to stop things from getting worse so good luck getting the 2009-style stimulus it will take to stop things from tanking altogether.
Yes, I’m in a bad mood because I’m sick but this is some sickening data so let’s be very careful out there! As I said yesterday, we saw this rally as an opportunity to cash out our bullish positions and we killed our weekly plays as we topped out in the afternoon and today, if we fail to get over 11,590 on the Dow (our Must Hold line) – then it’s time to pull the plug on the rest of the bull side (short-term bets – including our WCP) and get back to cash.
Still, the best advice I heard came from Mark Grant at Southwest Securities, who said:
Reacting to news headlines – like today’s morsel of good news out of Europe – is a trap to steer clear of. It’s just another whipsaw, the type that that has dominated Wall Street for months. The equity markets’ rallies upon some headline are always followed by a downdraft as the slow-witted finally figure out that the grand pronouncement is little more that
- Phil
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Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)
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