TGIF

The equities markets were mostly lower in Europe and Asia, and the Dow opened this morning off about 30 points.  The other indexes also opened lower, but now at 10:30am, the Dow if off 6, the SPX is flat and the Trannies are up 20.  The rest are most flat.  It looks like the Transports are making a run to catch up with the recent new highs in the Dow and SPX.

Oil is slightly lower this morning, trading at 86.47, while Gold and Silver are modestly higher at 1364 and 30.10.  The Euro is  off at 1.355. while the Dollar is strong, trading at 78.53 .  I don't always publicly offer my Momentum Change indicators for Dollar, as it is a very volatile market and is prone to whiplashes.  But for what it is worth, Momentum has flipped to the Buy side for the Dollar, while Momentum for the Euro is Neutral and trending lower.

The debt markets are finally catching a bid, with the 10 Year Note up 5/8 at 3.619% and the Bond is also up 5/8 at 4.692%  As long as the Risk Trade is clicked "OFF", the bond markets, and the Dollar should perform well.  A number of short term traders are suggesting the SPX, hitting it upper trend line has set up a short term reversal, with which I agree.  The Momentum Change Indicators, first warning of a Sell on 1/20 and a confirmation on 1/29 has been moving from Neutral back to Sell.  After getting stopped out of the trades from 1/20, I have  been waiting for another Sell confirmation or a flip to the Buy side before re-entering the market.  The Momentum Change indicator is close to a confirmation again of the Sell signal.... I will send a Trading Alert if that occurs intra-day.

Joe Granville used to talk about the "Wall of Worry" that his Bull Market calls always had to climb.  I don't know that he is still publishing his news letters  (as if anyone would read them) but he had a great gift for metaphor.  Just to remind us of the shape today of the Wall of Worry, it includes Sovereign Debt troubles in Spain and Portugal and an election in Ireland shortly that is likely to install a new government that is not as favorably disposed to the ECB bail out recently accepted by the existing government.  Ireland may choose instead to go the route of Iceland, and let bankers take the hit, instead of the Irish Tax Payers.

In Washington DC, the newly elected Republican Congress is showing increasing disregard for the party leadership and calling for larger cuts to domestic spending than first proposed.  Initial proposals now are focused at traditional Republican targets, where cuts are popular with the ideological base, like cuts to NPR, Environmental programs, Jobs Training, Education, etc.  No word yet on action on any of the favored programs, like Defense and Farm Subsidies where there are real dollars that could be saved.  And lets not forget the Debt Ceiling vote in early March that has the potential for real mischief.

Then there are reports of continuing deterioration in housing valuations across the country, and a recent report stating that 27% of all mortgaged homes in the nation are upside-down.  And a growing awareness that inflation is increasing in energy and food, while a recent report that 20% of National Income is paid by the Federal Government.

There are more, but I am out of time.

Best To Your Trading!

Bill