PreMarks 09.26.11

That line in the sand we posted below looks like it's going to hold at least at the open today.  Futures are up across the board on news of a debt package out of Europe.  We'll have to see more of the details before the markets will likely be comfortable that there really is some traction to the resolution of the problems over there.  We also need to remember that stocks are oversold in the short term.  The S&P 500 lost over 6% last week.  That was its biggest weekly decline since the October 2008 when Congress voted down the first TARP proposal. Stocks are lower by almost 10% for the year now.  From its late April highs, the S&P 500 is down 17%.  Given the magnitude of that decline it was likely we'd see some sort of counter-trend rally at the beginning of this week.

Monday morning rallies after a big prior down week are tricky.  Traders will often fade the initial move and we'll have to see which way the wind blows as we start off today.

PS:  Noted above the market's  17% decline from high to low so far this year.  That's actually pretty typical in terms of what we most often see regarding declines during the traditionally weak April-October trading period.  Also I'd say watch Washington this week.  There's again threats of a government shutdown.  That problem could likely gather traction in a negative manner the longer it's allowed to fester.

*Long ETFs related to the S&P 500 in client and personal accounts.