Heading into a short week of trading the question marks remain. The challenge for investors remains patience. The lack of clarity and rise in uncertainty surrounding the global markets is squarely in play. We have discussed several times the wall of worry facing the investor and they have not really been resolved or eliminated. Even the issue facing the EU with Greece was hyped as resolution last week, but the facts or details remains a mystery. They will be out this week and if they aren’t or even if they are delayed the markets will react. Thus, the need for patience when it comes to our portfolios. Being a prophet is a losing proposition.

Europe continued to benefit from the optimism about a resolution to the debt issue in Greece. The euro was higher against the dollar and Barclays posted better than expected earnings report. Some good news is helping the futures to ride higher with gold jumping higher.

In other news from Europe the UK reported hotter than expected inflation rising 2.9%. This will be of interest to investors as the US is due to report both CPI and PPI this week. Watch reaction and rationale on this number. Thus far it is a buried headline, but definitely something to watch.

Gold was up more than 2% or $1114 early this morning, The euro is stronger against the dollar and the rationale is a solution for Greece is on the way? I guess if it can go lower on the demise of Greece it can up on the hope of a bailout. Watch for some resistance around the $1125 level short term. The metals have been oversold on this issue and we stated in the scan list to look for am move higher. Watch the gap open and don’t chase trades.

Commodities have been hit by the news from China and their attempts to slow their economy by raising reserve requirements. Thus, any good news related to commodities is going to push those sectors higher off these oversold conditions. Oil is up 1.5% this morning as well getting in on the positive news.

As we discussed in the Friday night updates the intraday activity on Friday pointed towards positive activity. The buying was subdued heading into a three day weekend. Thus, look for the open to continue the rally off Friday’s low. The question mark will revolve around sustaining the move and resistance coming into play. 1103 on the S&P 500 is the first level we will have to move through on higher volume. Crude will face some resistance at $77.05.

The base metals moved up nicely last week off the lows. I like the outlook for steel and copper short term to bounce and retrace at least half of the decline from the last four weeks.

China is the other hot spot for speculation with the announcement on Friday to increase there reserve requirements on lending. This rattled the markets early, but then they rallied back from the selling. However, this raises a more direct question relating to owning or selling stocks in China. FXI, iShares FTSE/Xinhu China 25 ETF is only a small picture of that market, but it does show the recent weakness in that market. The bounce off the recent low at $37 is worthy of tracking to see if it holds or the country breaks lower again. The decline has been more than 15% from the high and bounce not very convincing technically. I am looking for this to consolidate in the coming week (4-8) and then have some clear direction higher or lower.

This remains a dangerous market place for investors. If you don’t like risk raise cash levels in your portfolio and wait this period out. Clarity will return to the markets near term, but for now volatilty will remain. Stay focused on what you are trying to accomplish and be disciplined!

Have a great day investing.