Market Outlook: Current Scenario Is Similar To The 'Flash Crash'

A quiet day unfolding with just Chicago Fed permadove on the wires today at 1pm, following some early pre-Japan market fireworks in the USDJPY and the silver complex, where a cascade of USDJPY margin calls, sent silver to its lowest in years as someone got carted out feet first following a forced liquidation. This however did not stop the Friday ramp higher in the USDJPY from sending the Nikkei225, in a delayed response, to a level surpassing the Dow Jones Industrial Average for the first time in years.

Barclays Capital via email reports that German ZEW economic sentiment index falls sharply again in November. The ZEW German economic sentiment index fell to -55.2 in November from -48.3 in September, below our forecast (-52.0) and consensus (-52.5). The current reading is far below the long-term average of about +25 points and reflects the very low expectations of the financial experts taking part in this survey for German economic activity over the next six months.

Last week saw a crazy full schedule of economic data accompanied by market volatility. This week has much quieter calendar. "The first important data release does not arrive until Thursday, when we get May retail sales," said Deutsche Bank's Joe LaVorgna.

By Price Headley: Though the bears took a toll two weeks ago, the bulls weren't willing to yield control for two weeks in a row. That's a major victory too, considering that stocks were nearly on the brink of a significant meltdown. That's not to say a major correction is still out of the question, but the bulls at least bought themselves some time.We'll look at how the scales are tipped below, right after detailing some of last week's and this week's most critical economic data.

By Jarred Cummans:Today marked the end of a tumultuous week that saw high volumes accompanied by high volatility. The week saw poor trading days until Thursday came, when all hell broke loose. A massive sell off led to losses of more than 3% in most major benchmarks, as investors hit the panic button in reaction to Fed Chair Ben Bernanke’s speech and policy decisions.

By Price Headley: Not only was it the first winning week in the last five, it was the biggest winning week in the last eight. Oh, it still came nowhere close to undoing the damage/carnage seen over the prior four weeks – a 16.5% drubbing – but it's at least a sign that not all hope is lost.

By Price Headley: We knew we were due for a dip after the heroic rally three weeks ago; last week we got it. Still, it wasn't enough to snap the overall uptrend, nor the spirits of the bulls … traders ended things on Friday in a buying mood, not wanting to head into the weekend empty-handed in case the budget crisis was resolved and/or Europe doesn't fall into the ocean.