Waterfall decline in Germany and market roundup

EWG is the Germany ETF (5-year chart) and is down 5% in Monday trade. There is minor support at 18, and then it may be back to the March 2009 lows of 13 or another 30% down. SP futures (link2) showing -29 to 1140 (SPY 114), and Dow futures -218 this morning. Overnight readings sometimes get better, sometimes worse by the time New York opens up.

I would not jump in the German waterfall on the long or short side. Fast markets are not for me. There is almost certainly much more news to come, as the Euro debt crisis and now a German leadership crisis is unfolding. German is one of the few strong economies left in the Euro currency union. If it pulls out, the Euro folds, or become unrecognizable. There is no stomach for giving more money to their financially distressed neighbors. The German decision to shutter all their nuclear plants I see as a strike against them. I see it as an emotional decision that will make German companies less competitive, due to higher energy costs. The decision also illustrates how emotion driven German voters can be.

A quick chart round up shows GLD making new highs, TLT new highs, SPY still above the recent 110 lows. Asset reallocation may have been part of this recent stock rally, with folks selling bonds and putting that money into stocks. There is unlikely to a second round of that unless bonds make new highs. One catalyst for the latest bond rally, is money fleeing Europe. Gold also benefits as money flows out of the Euro.

As for U.S. stock investors, I see more than a few articles about how staying put was the right move in 2008/2009. Keep in mind that top to bottom that was over a 50% decline, and we are down less than 20% off the recent highs at SPY 118 (137 was the high, 5-year SPY chart). My trading focus is the support area at SPY 105.

Another open question is whether $2000 gold means anything. I am undecided on that one. The recent $200 tumble may have been that reaction already. Shorts may have stops just above $2000, and there seem to be a lot of shorts in this gold market.

Bonds, I still have a bullish trading bias, despite what seem to be absurdly low long term rates. As I wrote before, I may start to look at trading the bear side of bonds (TBT) in the Oct/Nov time frame.

As for the President's upcoming speech, I'm not expecting much. Said to say, the current chief has a reverse-Midas touch. Most everything he touches turns to ashes. Latest in the news was a solar plant the President visited in 2009, going bankrupt (link4). It cost the U.S. government over $500 million in loan guarantees for 1100 jobs that lasted about 18 months.