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Shanghai up again, and Draghi is all over the place

The Shanghai Composite is up 4.3 percent to another new high, and Hong Kong's Hang Seng rose 1.7 percent. There's no specific reason, but mainland China stocks have been surging since the market opened to foreign investors in a big way in early November.

The People's Bank of China has also been hinting at stimulus measures. Exchange volumes have increased dramatically. The Shanghai Index is up 37 percent year to date. Chinese energy names like PetroChina and Sinopec were up big, too.

Meanwhile, European Central Bank President Mario Draghi is all over the place.

European stocks weakened and the euro shot higher as the ECB chief said the the bank will reassess its current plan in the first quarter, implying that any initiative to purchase sovereign debt—which the market wants—was not imminent.

Draghi also made references to the ECB balance sheet today, saying that it is his "intention" to raise the balance sheet by 1 trillion to 3 trillion euros, but that is not a "target." If that sounds a little too subtle, it is in a normal sense—if not in central banker speak. It means the ECB may not be as aggressive as initially thought.

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Draghi later said that the ECB was discussing buying all assets "except gold." Gold dropped, the euro began to weaken, and stocks began to come back.

Elsewhere:

1) In retail earnings, guidance has been skewing very heavily negative. Many companies have told investors to lower their expectations in the last few days: Guess, Express, Aeropostale, Pacific Sunware, Abercrombie & Fitch, and Tillys.

The problem: Margins are under pressure. Why? There's no buzz in the fashion cycle, and consumers are spending elsewhere. We had David Berman from Berman Capital on our air on Monday, and he reiterated his theme that Apple,Amazon and Samsung were collectively taking huge amounts out of the consumer wallet.

It isn't all bad. L Brands and Cato had good same-store sales, up 8 and 7 percent, respectively.

2) UBS downgraded Wal-Mart to "neutral" from "buy," saying valuations are near recent highs. Tell me about it. This is a problem with a lot of stocks: overbought conditions.

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Traders have been arguing that lower gas prices are going to be a help to discounters, but it sures to me that the market has priced in lower gas for a long time. Just look what these discounters have been doing in the last two months:

UBS is right. It's not just Wal-Mart. There are an awful lot of stocks that are overbought. According to our partner Kensho, some big pharma and biotech names like Eli Lilly and Biogen Idec have had big moves up recently and are significantly above their 50-day moving average. That implies it is likely the next trend will be to move lower.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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