We’re back on the downside today as fears over Italy’s succession plan seemed to set in. The S&P 500 slipped 1.66%. Interestingly, European equities were relatively flat today despite the uncertainty. In commodities, oil had another big day as it shot up 2.40% to 101.75. After a few days of minimal movement, the VIX took a moderate jump, rising 7.34% to 33.51.

There’s still plenty of risk on the table that makes me wary of whether last month’s equity gains will hold by the end of this month. As the fate of Italy and Greece are still up in the air, increasing equity exposure isn’t exactly the best idea in the world at the moment.

While Italy’s 10-year yield dropped today, it was largely due to the ECB coming to the rescue to buy up their bonds to the discontent of some Eurozone members who want the ECB to be hands off in the bailout process. This semi-artificial demand so to speak masks the negative outlook on Italian debt, which isn’t under control.

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Markets took a dip today given continued Eurozone uncertainty and less than stellar data. The S&P 500 retreated 0.95% while other major indices across the global echoed a similar negative sentiment.

The dollar appreciated against the Euro to $1.36/Euro while commodities had a mild drop. Volatility slightly edged up 3.63%, but overall market volume was quite low for the day, so we’ll have to see how the risk picture transpires over the course of the week.

Today’s telling figure was a 2% reduction in Eurozone industrial production for the month of September. This was the biggest drop in nearly 2 years ago, an indication that Europe’s real economy outside of debt issues is hitting a major roadblock. The compounding of economic weakness and financial breakdown could accelerate the likelihood of a worldwide recession.

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In case you missed it, here’s a summary of the ETF topics and market reviews I posted to my blog during the week ending on 11/13/2011.

An almost 4% pullback in equities shook the financial markets last Wednesday, as Italian bond yields rallied above the 7% pain threshold. However, the bulls pulled the major indexes out of the basement during the subsequent 2 trading days, as a new government, along with fresh commitments to austerity measures, gave hope that Italy, at least for the moment, was saved from a debt debacle.

How long that fact resembles any reality remains to be seen, but the major domestic trend is up, and we’ll carefully follow its direction.

This week, we covered the following:

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