Market Commentary – July 11th, 2011

A Couple of Thoughts Ahead of the Open:

  1. I am looking for the Federal Debt Ceiling to dominate the news this week.  I am not real optimistic that a deal will be reached this week.  I think we are at the tipping point where the Federal Debt is going from manageable to out of control.  I think the Republicans’ and their votes get this; and I think the Democrats and their voters think that because it has been manageable in the past it will continue to remain manageable.  It is the equivalent of seeing a disaster coming and believing nothing is going to change.  It is one or the other,  and there is no common ground.
  2. I am looking for news regarding the European debt crisis spreading to Italy; and somewhere it goes from being too big to fail, to too much for Germany to swallow.
  3. I am also looking for increasing news regarding the talk of a double dip in the economy.
  4. The pre-market futures are obviously pointing towards a lower open, and baring some unexpected news that reverses that trend, I am expecting the market to open lower.
  5. In reviewing the charts from Friday’s trading activity,  the vast majority of the heavy volume stocks had negative chart patterns.  It has been this way for the last several trading days.  This generally signals a market reversal.
  6. Looking at entering a short position and selling puts, creating a covered put trade.  Possible short sale candidates include:  BAC, PFE, SCHW, MSI, A, NE, MMI, VMED, GIS, IMAX, MHK, USG

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