Friday, May 14, 2010


What's particularly disturbing about the current action in the market is that it takes only a few large sell orders pull the rug out from beneath the whole market. There is almost no buyers and market seems to hit an air pocket every 12 minutes or so.

Right now the US markets only stand about 2 percent above their closing lows from a week ago after a TRILLION dollar bailout in Europe. The Euro is being crushed and keeps breaking through technical levels. Rumor is that the US Banks are piling on by shorting the Euro as well -- gotta keep those perfect trading days going (btw - in Goldman's defense they weren't the only ones with a perfect trading quarter at least 3 other banks had perfect quarters).

I said about a month ago that people were getting very aggressive against France and it seemed to be a strange position to take. Well, it may just be rumors but the talk in the market of a possible French downgrade or France leaving the Euro are adding to the instability in the markets right now. The comments from Deutsche Bank's CEO that Greece might not make it also didn't help.

We got one trillion dollar bailout last weekend, what will this weekend bring?

Separately, the retail sales numbers from the government were surprisingly strong. There was strength in building materials which can be tied to some pick up in the low-end of the housing market. However, I'd caution that the data on retail sales has been mixed as of late. The government data has shown a nice steady uptrend, but they are using historical seasonal patterns to smooth their trendlines. Stores on the frontlines seem to be coming in a little light - like Kohl's which missed expectations - but there are other surveys that indicate sales were up for the 7th month in a row. Mastercard also reported that retail sales dipped 2% in April after rising for 3 straight months by 2% a month.

Right now I think the only thing that matters to the markets is the chaos around Europe.

Cheers and watch out for weird action this afternoon.

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