Monday July 23, 2012
Our premonitiion that stocks could sharply drop this week has come to pass. Recall our graph on France and Italy. It is now the same emotional moment of despair for Europe that the world experienced the first three months of 2009, as well as November, 2008. And so the headlines are negative, and over the weekend the public decided to sell, and how.
One fund manager suggest this is the time to buy Spanish bonds yielding 6-7 x what US bonds pay.
We are truly in the midst of a panic sell off, dumping of Italian and Spanish bonds and all else connected with these countries. As this fellow says, what is the likely outcome of all this, a common Euro bond, probably. Are Italy and Spain going to default across the board? I suppose my point here is that
Italy and Spain are in the process of a crash, it is not being postponed. It is rarely a great idea to sell on Monday morning amid hysterical headlines.
The European markets close at 10:30 CST, that is certainly pressuring the US market pre opening. But I think the thing to keep in mind is again that Italy and
Will we see a smash sell off this week as we did in March 2009, it is looking that way. Let me re phrase that, between Friday and pre market this morning we are down 320 points, recall the week of last October, here it is as a reminder, the big days were Monday and Tuesday with the most volume, then the market reversed Wednesday to the upside, all the sell orders had to be fillled first, now as then there are no bids, and so crude is down this morning a whopping $3.50! The range that Oct 3 was over three hundred points and over four hundred the following day, and that exahusted the selling.
Date Open High Low Close Volume
Fri 07-Oct-2011 11123.41 11232.05 11051.13 11103.12 935017600 Thu 06-Oct-2011 10939.87 11132.60 10858.67 11123.33 1025864128 Wed 05-Oct-2011 10800.47 10950.89 10738.10 10939.95 1145720960 Tue 04-Oct-2011 10651.44 10825.44 10404.49 10808.71 1387509760 Mon 03-Oct-2011 10912.10 10979.19 10653.34 10655.30 1207355648
Will investors dump IBM, XOM, Apple, MCD, serious companies making scads of money, that would be typical of a panic sell off.
Here is the long term line up using International Racing Colors for each country.
Italy Red (appropriate....as in the Red)
At bottom note the divergence, surprisingly the CCI has improved form its early 2010 low. It is tracking Italy.