Stocks continuing to sort out a range bottom as Wednesday's action traversed but did not confirm a bottom. After last Friday, many had worried that some of the broader indexes closing around the 200 day moving average meant something, let all concerned know ; i.e. the 200 day average never means anything in any market.
The fact the Fed is jawboning the upside along with a Walker victory in Wisconsin led to some kind of mutant Stimulus/Romney rally event. Bears got squeezed and there has been a thrashing to establish a range bottom.
Traders have learned each economic disaster since 2008 has also been a buying opportunity and the current European economic disaster seems at least to be following the same pattern of rewarding bad behavior. An important difference is European problems are largely out of U.S. control despite all the stimulus if needed winking professed over the last couple of days.
Europe has a long history of epic events spinning out of control right after reassurances from the most high. The partial collapse of the European economic system is about the only thing which would have the magnitude to wreck global interconnected banking. It would capsize not only the current weak recovery, but impact Federal Reserve efforts past, present, and future. A kink in economic activity would require the rest of corporate growth to recalibrate at a lower level. One more representative of the actual economic conditions reflected in the U.S.'s biggest industry, housing.
The usual three ground forces engaging the economic battle of the last five years has been spin, cash, and hope. Europe will deploy all of them. If it works, financial assets will outpace broader economic growth. If it fails and Europe blows it, financial assets will not be able to provide a fail safe any longer.
