Major Market ETFs roared back for a second straight day despite persistent uncertainty in Europe. The S&P 500 bumped up 1.88% while commodities also did well, with oil and gold rising 1.20% and 2.16%, respectively.

While some optimism has crept back into the market, I find it puzzling how the European negativity appears to be so severely discounted. The current trends justify some equity ETF exposure on the domestic side, but I am maintaining a cautious approach as to how I achieve the exposure in the wake of these volatile swings.

With Trichet out, Draghi has set the tone for the start of his ECB presidency. He has spearheaded recovery efforts by loosening monetary policy, cutting rates by 0.25 percent. This should hopefully ease credit flow and uplift markets, especially amidst widespread austerity that is choking economies throughout Europe.

Read More

While the Fed left current interest unchanged at record low levels, it will also continue with operation “Twist” by buying longer term treasuries and selling the short end of the yield curve.

The Fed’s view of the economy was considered “frustratingly slow” but appeared to be somewhat stronger than in October. After the announcement, the markets briefly sold off as traders had hoped for another round of Quantitative Easing. However, the Fed’s affirmation that they would in fact act, should the economy fall apart, was interpreted as a positive for equities supporting the rebound into the close.

Read More

As the situation in Europe unfolds, equity ETFs tumbled once again as the S&P fell 2.79%. And after a period where it looked like volatility was falling, the risk switch has turned back on again, with the VIX rising 16.05% to 34.77.

Also, the dollar improved against the Euro to end the day at $1.37/Euro. We might’ve been approaching bull range, but uninspiring economic indicators and political frictions in Europe suggest we won’t be making much headway any time soon.

Just when the European crisis appeared to be improving, the emergence of the Greek referendum has put a nail in the coffin. Letting the public decide whether or not to accept the bailout can have a destabilizing impact, if it’s rejected. The bottom line is that Greece completely lacks credibility and is becoming the laughing stock of the EU. But the joke isn’t funny anymore.

Read More

After a stellar performance for equities last week, Halloween scared off investors to make markets end the month on a low note. Major indexes took a sizeable dip, with the S&P 500 falling 2.47%. Also, after recent dollar weakening, the dollar came back up to $1.38/Euro. Most startlingly, the VIX jumped a staggering 22.14%, nearly hitting the 30 mark.

It was about time that markets seriously considered Europe’s bailout funding uncertainty after last week’s seemingly irrational exuberance. Sure, Europe finally made some progress last week, but a concrete EFSF funding plan still doesn’t exist. That’s enough reason to continue exercising major caution.

Greece still isn’t completely resolved as it enters a contentious political debate surrounding whether or not it will accept its bailout package as PM Papandreou called a referendum.

Essentially, the perception that Greece may have been saved is seriously up in air. Even more surprising, most Greeks are against the bailout package. Last week’s equity ETF jubilation just might be undone soon if we the reach the final act of this Greek tragedy sooner than expected.

Read More