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Rainy Days and Mondays for Market: Dave's Daily

Stocks in this article: IBM XLK C BAC GS KRE KBE

The Germans threw a monkey wrench into the EU "fix" once again asserting that Sunday's deadline for a credible plan wasn't certain. This led to a sharp decline in stock prices since the "idea" that a plan was going to be implemented was priced-in with last week's short squeeze. Friday after the close of trading it was announced that the U.S., in addition to other members, were not willing to use the IMF for any EU rescue with $350 billion. That was a blow to EU forces hoping someone else would bailout them out of their troubles. Add to this the often reliable short-term overbought McClellan Oscillator and it was likely we might sell-off anyway.

The poor Empire State Manufacturing Survey (-8.48 vs consensus -3.25 and prior -8.82) didn't help matters for bulls Monday. Meanwhile Citigroup (C) beat expectations due to an accounting adjustment and Wells Fargo (WFC) missed expectations causing financials to fall into the red. Much watched Goldman Sachs (GS) and Bank of America (BAC) will report earnings Tuesday. On a related matter, and without much surprise, HFTs (High Frequency Traders) are now the dominant force in program trading volume on the NYSE as outlined in this report.

IBM reported earnings after the bell of $3.19 ($3.28 after adjustments) on revenues of $26.16 billion versus $26.26 billion expected. The stock continued to sell-off slightly in extended trading. Apple (AAPL) will report earnings Tuesday ($7.30 expected) as will Intel (INTC expected $.61) among many others.

Gold prices finished down roughly $10, the dollar was higher versus the euro on the German news. This in turn led to a decline in commodity prices overall while bonds were sharply higher on the stock sell-off.

Forthcoming may not be able to overwhelm the ongoing EU drama and disappointments. Low levels of confidence and high levels of uncertainty aren't allies for stock bulls.

As stated, stocks were lower taking the major averages back into the red again for 2011. Volume was quite light given the selling compared with previous periods while breadth was negative.


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