Friends,
The direction of the market these days is only as good as the last headline. We were nursing a nice 150 Dow point rally this morning with visions of Eurozone deals by the end of the week dancing in our heads, when news crossed the wires that S&P was going to put all 17 nations of the Eurozone on credit watch negative. This includes the six AAA nations of which Germany is one. What does this mean? Well, it is surprising that we give any credence to anything the rating agencies have to say these days, but it sure is a headline grabber. We are not sure what the outcome will be, but maybe it’s just another kick in the pants that the Eurozone needs. We will have to watch the reaction in European bonds in the next couple of days, but all this just might have the effect of making the Euro’s do what is necessary to actually solve the debt problems.
Well, once again after a nice 150 point early rally, stocks plunged all the way back to even during the last hour of trading. By the end of the day, the Dow Jones Industrial Average recovered to finish the day up 78 points to close at 12,097. The S&P 500 was up 12 points to close right at 1257. Gold finished the day down $26. Oil, after being up most of the day, ended unchanged right at $101 per barrel WTI. After getting through 1257 easily this morning the S&P 500 traded right up to the 1265 resistance level, only to be derailed by the potential downgrade news, but struggled to get back to and close at that 1257 resistance level. That was a moral victory, anyway.
Domestically the ISM non-manufacturing number was slightly worse than expected, but not bad, but traders are squarely focused on Friday’s announcement from the Eurozone on whether there is a real deal that Merkel and Sarkozy can sell to the others. Today’s S&P wet blanket notwithstanding, Friday’s news most likely dictates where we are headed for the rest of the year. Buckle up and keep your arms and legs inside the ride. We’ll let you know how it transpires.
Have a nice evening everyone.
