Posted January 15, 2012 16:28

This past week, the market had to digest multiple news reports. On Thursday it was the jobless claims that came in at 399,000. This was a bearish report for the market because it brings us to the key psychological level of 400,000. On Friday, the consumer sentiment number was released. The number came in at 74. But that wasn’t the big story on Friday.

The big story is Standard and Poor’s downgrade of 9 Euro zone countries, the most notable being France. Not only did this take a big hit on the US markets but also tremendously hurt the Euro. The Euro fell over $.02 against the dollar. With the Euro falling, does that indicate a sell-off or will the US markets continue in rally mode? Everyone is hoping for decoupling between the Euro and the equity market. This would mean that even though the Euro keeps falling, the US market will focus on the positive economic climate of the US and forget about the impending recession in Europe. If this would occur then the markets have a good chance of rallying to 1350 (on the S&P 500).

 

See Reference: In France, Pain of Rating Downgrade Is Especially Acute

Disclaimer