Stock Markets Retreat After Harsh Remarks From Sarkozy And Merkel
The stock market had recovered all its early losses to turn briefly positive on the day. This was impressive to say the least as there is still underlying fear everywhere. Europe is still a mess and experiencing an epic default risk. This move up to the flat line coincided with the 12pm ET press conference between the leaders of Germany and France. President Sarkozy and Chancellor Merkel took a hard line against the southern countries in Europe. Balanced budget amendments were thrown around as well as a possible financial transaction tax. This was not what the market was hoping to hear and the selling started quickly. An hour after being flat on the day, the Dow Jones Industrial Average was down 166 points. Since those lows, the markets have started to recover slightly, but remain sharply lower.
The closing bell will determine everything on this market. Do the markets go up tomorrow and the rest of the week or sharply down? A slightly lower or flat close would be extremely bullish for the markets. A close at the lows of the day would be very bearish.
On a technical note, it is amazing how the low of the morning session was the pivot low from yesterday and the high of the day was a perfect gap fill. In a world where valuation seems to have no place, the technical levels are the true tell of a move in the markets.