Last May, if you recall, the demise of Europe was upon us.  At that time, Greece, first, then Spain and Portugal were the reasons the Euro Zone would collapse and the euro was destined to die a swift death.  A little financial hocus pocus from the European Central Bank (ECB), some rather severe cost-cutting measures from the countries, particularly Greece, and some high-priced debt put the whole issue on the back burner.  If nothing else, history does tend to repeat itself, at least in the general, if not the specific.

LONDON — European officials, increasingly concerned that the Continent’s debt crisis will spread, are warning that any new rescue plans may need to cover Portugal as well as Ireland to contain the problem they tried to resolve six months ago.

So, here we are again … The market is threatening to lose much, if not all, of what it has achieved in the past few months because the threat of Euro Zone dissolution is upon us.  Mind you, this displaces the good economic news we have received lately, the positive punditry that has move both business and consumer confidence to the upside, and the value of the almost-but-not quite stellar corporate profit we saw in the last reporting period.  

Some economists wonder if unity will hold or if some new system that allows countries to move on one of two parallel financial tracks is needed.

The reality is that none of this economic “bad news” is new.  How long have we known about Ireland’s fiscal issues?  I mean, really, it’s not as if this problem just popped onto the radar screen.  I know, I know, one must not get emotional about the market, but if truth be told, the market taking any excuse to massively take profit is a bit irritating, at least for my goals and the type of trading I do.  And, as always, in my humble opinion, this is what we are seeing today – massive profit taking.

I suppose this is to be expected.  After all, we have had a nice market run up now for a couple of months, which, by the way, was not supposed to happen.  Remember, the pundit consensus pointed to a major demise in the market in the months of September and October, historically, the two worst months of the year for the markets.

Given the unreliability of “consensus” about the market, I plant my flag here and now – this too shall pass and the market will resume its sluggish uphill climb, and, as the economic news improves more consistently in 2011, that sluggish movement will speed up.  Now, this is not to say we do not have head winds in front of us, and that some of those winds pack the potential of hurricane force (think bond market, debt, and QE), we do.  Those issues are “down the road,” which means the market is not concerned with them, and won’t be until the media brings them to the front burner.

Trade in the day; invest in your life

Trader Ed