What the FITCH!

he overall market action yesterday was not good with the warning from FITCH about European bank losses. The bank stocks were a disaster and appear as though they are anticipating further problems in Europe.

Europe, of course, is on the minds of every trader to the point where it's overshadowing all other thoughts on the market. As said earlier this week, "reality is slowly sinking into the markets." One of the big movers today is the gold market. This precious metal came under pressure from the get-go and may have further to go. We still believe that the longer term trend is positive for gold, however in the short-term we may see a pullback to the $1,700 level. Readers of this report will know that we were very suspicious about the $1,800 level as a psychological resistance zone.

It is turning out to be an important week for the market. The big day for us will be Friday. How this market closes at the end of the week will give us a blueprint for next week.

With continued rioting in Greece and the threat of social unrest in France and Italy these markets are teetering on shaky foundations.