Marc Haskelson's  Instablog

The EU debt Crisis is escalating as the Vote in Greece approaches. The fears are spreading to other nations as thoughts of contagion are increasing. Worries over National Debt levels are mounting as Spain is set to receive funds to rescue their banks, but these funds come as a loan that will increase the Debt Levels to about 90% of GDP. Investors are worried that this level of Sovereign debt may push the yield on the 10 yr bond in Spain over the danger level of 7%. Other nations in the EU (Ireland, Portugal, Greece) that reached this point were forced to seek bailouts. If Spain were to require a bailout there would likely be severe conditions of austerity placed on the country by the IMF, ECB and Euro Zone Finance Ministers. The austerity measures, placed on these other countries, have been criticized for limiting the ability of these countries to have any sustainable growth. In some cases these measures have caused the economic conditions to worsen. Options for a resolution to the crisis are limited and the time to act in an effective manner is coming to an end. Bailing out the economies in the EU (or any Nation in the world) does not address the instabilities and structural deficiencies that created the problems in the first place. The effect on the Markets around the world have been dramatic. Trading cycles have been truncated and investors (still hungry for profits) look to take profits early. These shortened trading cycles have caused computer algorithms to be re-written to take into account the volatility in the Markets. With the markets seeing much lower volumes, any fluctuations in trading cycles can move the markets dramatically. This is having the unintended affect of creating a negative feedback loop; shortened trading cycles cause computer modeling to create algorithms for these shorter cycles. The lower volumes allow these changes to have a greater affect on the markets further shortening the trade cycles. This will likely come to and end when investors lose confidence in the ability of the market to correct itself.

Reports indicate that China has drastically increased it's imports of Copper. Is this an indication that the country is ramping up building and production or are they just buying at these low prices? China is the second largest economy in the world and is one of the largest consumers of Copper and rare Metals. Any increase to the imports and possible use of these metals may have serious implications to the world economy. Technical indicators will be affected by these variations in the analysis of this data. Computer algorithms, which control 70% of the market volumes , will likely pick up on the change in the expected cycles. Commodities, which are affected by the strength of the dollar, are also affected by the perceived consumption by the largest markets in the world. Investors look at these variations as indications of a good trading opportunity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.