PreMarks 11.09.11: Italy

Stocks are set to get clobbered at the open on investor concerns that Italy is quickly becoming the next Greece.  The opening looks to be down 1.5-2% on most stocks and indices.  From our perspective this may have more to do with the fact that the market is over bought in the shortest term we measure.  It's not like Italy was an unknown event going into today.  What will be most important will be to see how investors react to this news.  A market that it met with this 2% down open and then bought would be indicative of a market that wants to go higher in the days ahead as it would likely be showing a "buy the dips" mentality.  If we head down and stay down or go lower it could mean that stocks have more work to do digesting the recent gains.  The trendlines we highlighted in yesterday's post below will likely be in play today.  We'll garner more clues about future market action by how price reacts to these areas of support and resistance.