Goodbye 10,000?

spanish bank crashFriday's employment surely hung over investor's head over the weekend as markets experienced yet another strong selling day on Monday, in which the Dow closed down 115 points. Despite a morning rally, selling prevailed in markets as more uncertainty set in. Job loss reports were well below expectations on Friday, which caused for the bulk of the selling to close out last week. Unfortunately, a lot of variables hang over our economy's head, which is not providing an environment conducive for stock buying. Here are some factors that keeps our economy in limbo.

Financial Reform Bill
Much of what we have heard has been hear-say in regards to the large bill that is causing people all over the world wondering what this bill is going to do. President Obama would like the bill to be signed by the end of the month, however, those are aggressive goals. The fact remains that not much is known about the bill as well as what consequences we should expect with it passing. As long as it remains in limbo, I expect financial stocks to do the same.

European Banks
We have seen extreme weakness in European banks (especially Spanish Banks) recently, which is dragging down the global sector. The crisis in Greece is not helping things and if it were not for China bailing them out, there could be some serious problems.

Cleaning Up The Oil
It may seem that there is little correlation between an oil spill and larger scale economies, but that is not the case. In fact, the recent BP oil spill is continuing to create a lot of noise in the marketplace. 20,000 barrels of oil are flowing through the Gulf of Mexico as we speak, which there is no telling what kind of effects we can expect from that. The spill damage far surpasses original expectations and is only making oil consumers more angry in buying their product. Clean up that mess!

China's Slowing Pace
Much of the fear to global analysts was the rate at which China's economy was growing in such a little amount of time. Many felt that the country's economy would fall just as hard as it grew. However, thus far, China has seemed to manage well with it's slower growth periods and minimize any lopsided whirlwind. Thus far, China has been a good bailout for many failing economies (including the US) and needs to stay that rock in the midst of many declining markets.

These coupled with the continuing employment woes that the US economy is faced with, makes it hard to gain real momentum behind a rally. Sure, we should see rebound days here and there, but I cannot think there can be a significant run in the markets until many of these unknowns are solved. For the most part, the shorts have been performing very strong the past couple weeks and I look for them to continue to perform strong the next few weeks. Happy Trading.