Building a Wall of European Worry

 | Dec 12, 2011 | 4:21 PM EST  | Comments
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We can sum up the action today in one word: dismal. We gapped down to start the day on worries that Europe really hasn't resolved anything, and we had nothing but the standard bounce in the final hour of trading on European news. This time it was talk from the German Finance Minister that Commerzbank does not plan to take state aid.

The dip-buyers were completely uninterested for most of the day, breadth was weak and volume was pathetic.  We even had an earnings warning from Intel (INTC) to ensure that the mood was particularly gloomy.

The good news is that sentiment is so poor and the market so frustrating that many folks are likely to be underinvested and now well positioned for upside from here. If we can actually gain some traction, it would likely cause quite a bit of scrambling and chasing as folks tried to add some long exposure. We definitely have conditions for a major wall of worry, but few signs that we are going to climb it.

There are some decent charts out there, but volume is running so light and the market is so lacking in energy that it is tough to be aggressive. If we can forget Europe for a few days, the bulls could probably get something going, but the choppiness of the action is keeping most folks very short term.

It definitely was not a very good day for the bulls, but I'm staying optimistic about our chances for some upside action soon. If we can put Europe aside for a little while, there are some charts out there. If there is a little more energy, the desire for some end-of-the-year profits is likely to drive things. The key is that we actually ignore Europe, and that seems to be an impossible task lately. Despite the dismal action today, I'm keeping a positive mind set.

Have a good evening. I'll see you tomorrow.

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