| Signs Everywhere, Pointing Nowhere |
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The spectacular drop below 10k in the DJIA last week came on the heels of the NFP number that failed to inspire optimism that the recovery would hold. In my reading over the weekend it was amazing to ready the varying views on the news. I came away with an unclear picture about what the future might hold. On the one hand, a close back above 10k on Friday may have kept the market from further selling this morning. On the other hand the news that small businesses are not adding employees, but rather cutting them, is not good news. A significant portion of the US workforce works for a company with less than 500 employees. These companies are still cutting jobs and tightening their spending belts. This Bloomberg article does an excellent job of explaining the pitfalls in the drop in small business optimism. It has also been interesting to see the rise in the USD in the last few weeks. Problems in Greece, Spain, Portugal and other EU countries as well as London have lent an air of credibility to the Buck. Unless there are definitive measures and support given to these ailing countries, the USD will almost certainly continue its rise in the coming year. That rise may not be even and measured, and could even become downright messy in the months to come. Action similar to that seen from 06/09 to 12/09 may in fact be in store. This latest EURUSD move lower is now at the 100% Fib extension line. Be very wary of shorts in this area as pull backs may be strong as traders capitulate, taking profits and losses in this area.
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