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November 7, 2011 – 5:33 pm

As we push towards the end of the year we readdress a common theme. Europe.

The decades of excess spending and massive borrowing is catching up to the entire Euro region and is causing massive trepidation in the markets. While Greece keeps making big headlines, the ultimate fear is that Italy could be headed for the same fate as their Greek counterparts. While the 300 billion euros of debt that Greece owes is significant, it is small enough to not cause a major banking crisis. Italy on the other hand owes about two trillion euros and a loss of confidence in their ability to pass austerity measures will continue to weigh on this market. The yield on their debt is at an all-time Euro era high which is a worrisome development.

At home here however the picture looks to be brightening. Recent economic news has not been spectacular, but the reports continue to indicate an economy that is growing modestly. More growth will be needed to lower unemployment, but a lot depends on Europe and how well they contain their own financial crisis. The super committee that is set out to cut trillions of dollars in spending over the next ten years seems to be making some progress, but as we have seen before, any deal should not be counted on until final votes are made.

Earnings season is winding down, but as of now the results have been good. Continued strong earnings should help support the US market, but headlines abroad will continue to supply volatility. Stick with domestic names with strong charts and fundamentals in order to dampen volatility. Don’t allow the headlines to dictate your views on individual companies. Stick with your convictions and take advantage of lower prices, but don’t let the repeating headlines rattle your nerves.

Good Trading

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