Overnight

I like to try to keep you informed of the basic fundamentals in the market, so in that spirit, as well as yesterday being a huge Cats and Dogs rally day, you may also know by now that it came (and you saw some of those volume surges of over 1000% in the C&D's) on the lightest volume the market has seen in 10-years excluding holidays. So for a normal trading day, it was the lightest in 10 years. That taken with the awakening of the Cats and Dogs rally should sound some alarm bells. As you might expect, the dominant Price/Volume relationship was solidly Close Down/Volume Down, which is the hallmark relationship in a bear market, although other factors are certainly contributing, none are healthy for the market.

I was watching the Euro last night and saw a dramatic drop off just before midnight, I checked the news and it seems that it was caused by the RBA of Australia keeping rates at 4.25 on expectations of a .25% cut, it wasn't so much Euro weakness as dollar strength that drove the Euro lower. The inflation concerns Australia is clearly telegraphing are making the market nervous that China will follow suit.  As such, trade in commodities today should be interesting, I would think they will underperform and in fact have started the US session on a weak note.

As I told you a week or so ago, earnings for the last quarter had seen expectations for growth slashed in half before AA even reported and still the earnings have come in very disappointing, well they're at it again, before the analysts can even slash their estimates, financial institutions are already pre-announcing to the downside and lowering expectations 1 month in to the current quarter! I suppose they are literally banking on investors short memories by pre-announcing so early.

In Germany, Industrial Production which was expected to remain flat to a slight gain, came in down 2.9%, remember what I said about why Germany needs the Euro-zone to support exports or you can substitute Euro zone for Free trade zone. This is the first decline in a very long time and whether it is noise or contagion remains to be seen, but the European market was uneasy with this development. In fact ES has decoupled with an early morning surge in the Euro off its lows.

Today will we finally get the Greek meeting? It is scheduled, but so was yesterday's. The market, being light on US data, will continue to keep a close eye on developments out of Greece.