News of an S&P rating downgrade for Greece to CCC was hardly a shock but it took a toll on stock market bulls. They couldn't manage to hold onto gains despite some positive M&A activity. More telling perhaps was the broad decline in just about all commodities where the mood and prices seem to indicate a lack of demand for just about everything. This may be the more accurate takeaway from Monday's action since economic softness is starting to have an effect.
Energy, precious and base metals, grains and softs were down across the board. Grains may rally, as with carryover stocks very low, any disruption to supply could cause prices to rally. The flooding of the Missouri River now underway could be such an event. The dollar traded in a wide range but ended the session slightly lower despite the Greek situation while bonds were mostly flat.
Former Obama economic advisor Larry Summers posted an op-ed piece suggesting what the country needs is another round of economic stimulus from the government. This will go nowhere other than to let people know he still exists.The Fed is still engaged in POMO activities and Primary Dealers (Da Boyz) can expect 12 more trading days ($5 billion per day) of bond buying (12 days of Christmas?) from the Fed until QE2 ends. And, yes by most reliable measures stocks remain short-term oversold as breadth continues to be negative. Volume on Monday was a little heavier than average. You can follow our pithy comments on twitter and join the conversation with me on facebook. Continue to U.S. Sector, Stocks & Bond ETFs