Don't get carried away by headline number: RRR, ITMN, GLD, VXX, POT

As said in my previous article, there would be small rebounce after sell off because of the option expiration date on Friday and it did happen today. Many have shorted the market and since its the last day of option expiration date, its just short covering rally so don't get carried away. At the same time there is no harm in taking advantage of this rally, but don't go all in. I am still bullish till tomorrow.

Next week we might get France downgrade which could be big event. There were lot of good headline number, like US jobless claim dropped to 366k, Philadelphia fed survey came 10.3 and good Spanish bond auction. I agree with Christine Laggard the "Europe crisis is escalating".

The picture is not as good as the headline number suggest.

1. US jobless claim was 366k for this week, but the continue claim rose by 4000 to 3.603 million. You can read further about the True picture of US economy @ http://www.freefdawatchlist.com/2011/12/true-picture-of-us-economy-is-it-time.html

2. Philadelphia Fed survey came at 10.3, which looks good but in December 2009 and 2010, it was 19.3. This is lowest in past two year.

3. Industrial Production came out -0.2%, drop from 0.7% from Nov while in Dec 2010, it was 0.8%.

4. Fitch downgraded US and Europe bank after hours.

Inspite of weak US data, Dow is now at 11818. Dow was at 11400, and 10328 for Dec 2010, and 2009 respectively.

France and Germany are officially in recession.  Yesterday France Flash PMI data suggested GDP of -0.4%, while Germany GDP is expected -0.1%. France is expecting recession for next quarter. France and Germany are biggest lender in Euro zone. So next few week would be really interesting. I am expecting worst in Feb 2012.

http://www.forbes.com/sites/afontevecchia/2011/12/15/ghastly-eurozone-pmis-even-france-and-germany-already-in-recession/

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201112151614dowjonesdjonline000779&title=insee-forecasts-france-and-euro-zone-to-enter-recession

Overall, I would say enjoy this rally, but its not going to last long so becareful and don't get carried away.

US CPI is coming out at 8.30, expected is 0.1%, bullish for GLD, IAU, 0 would bearish.

Stocks expected to open low: RIMM, AFFY, HMY

Stocks expected to open high: RRR, CRYP, XIDE, ADBE

Disclosure:  I am holding TNA, FXE, POT, BIDU, IDCC, BBY. and GLD