Stocks for Dec 6th: VXX, AIS, TEAR, DRI, PLX

Today was a confusing day for trading. US ISM non manufacturing index came at 52 and factory order of -0.4% which are really bad news, but the stock were high throughout the day on the hope that European leader are working on something. The factory orders data show how busy factories will be in coming months as manufacturers work to fill those orders. So a negative data means the inventories are up and less new order for next month.

Angela Merkel and Sarkozy came to an agreement on new treaty that automatic sanction will be imposed to for deficit breach of 3% below of GDP and they will be approved by March. So basically, there was no detail provided, and they want this thing to drag till March now. 

The bullish market liked it, or may be the hedge fund manager want to cash in as much as possible before the Friday meeting is over. The Italian bond market also showed great improvement it fell below 6. But the Eur/Usd never showed any kind of bullishness which the stock market is showing. 

Finally S&P interrupted the market rally by threatening to downgrade 15 EU countries; France by 2 notch and Germany by 1 notch. This means France and Germany both will loss their AAA rating, suggesting higher cost of borrowing money from the market. Both are the biggest lender in EU zone, a downgrade would be even bigger threat then now. "Euro is in very big trouble"

Right now, the media is not focusing on the parliamentary approval that all the 17 Euro country will require before they could pass any new treaty, which means it will take longer time then Merkel and Sarkozy are thinking. EFSF was a very small deal compare to treaty change. EFSF still needed approval.

There are two good thing at this time for Europe, the liquidity swap program is in place and Italian & Spain bond yield well below danger level.

As said in my previous article, a disappointment would take the market down to its low of October 2011 while a positive news can take market up to highs of July 2011. 

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Its not the time to be bullish or bearish either this week. Take a break. Start investing from next week. Headline risk still exist.

If your bearish then buy: VXX, TZA, FAZ, TYP

If your bullish then buy: TNA, FAS, TYH *** This is very risky. I am not recommending at this time.