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Traders Watching Euro Bond Talk

Near highs for the day, as Europe is on the verge of going positive into their close... the comments from the Dutch finance minister, saying the euro bond idea was worth exploring, raised eyebrows on trading desks. The Dutch have generally been opposed to the idea...this softening in their position could be important.

This is again a low-volume rally...we see volume pickups only on high volatility, downside days.

Breadth is poor, with 4-1 declining to advancing stocks...rather surprising given that the declines in the major indices are modest.

Financials weak, partly off the weakness in European financials, but don't kid yourself—everyone knows why financials have been underperforming since signs of a slowdown began emerging in April:

1) demand for loans is weak...traders know that individuals are more worried about jobs and income so they are not taking on new debt to buy big-ticket things, while corporations are full of cash and trying to keep cushions high so they aren't looking to do a lot either.

2) debt issues globally

3) yield curve flat

Any wonder that bigshots like Paulson and Appaloosa all reported reduction in stakes?

Energy stocks are underperforming...why do energy stocks underperform on days when the market is down and outperform on days when the market is up? Because they are high beta stocks that are directly tied to global GDP...and when you have German Q2 GDP up only 0.1 percent, that is a sign of slower global GDP.

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