The dollar gained some ground against the yen after Japan's apparent intervention early this morning. That's something that makes the market feel good.
It's not just the weakness in U.S. stocks this time. The dollar is falling (against major currencies) at the same time, and money is flowing out of the U.S..
I'm generally positive about the market outlook next year, too.
The accounting problems in the U.S. seem to have crossed a significant hurdle on Wednesday, and the external pressures on the Japanese market in general have probably peaked.
We're starting to see some companies that are struggling significantly in the technology industry. With earnings being in focus this week, they may suffer selling.
I expect some volatile moves this week, especially with the steep drop in U.S. shares. Oil-related shares may get a boost on the back of higher commodities prices.
In contrast to the year-end rally here driven by real estate and other domestic plays, taking a lead now are stocks which have a high correlation with the Nasdaq market.
The market is becoming very nervous about the earnings outlook for the tech sector after a string of bearish outlooks by tech giants such as Nortel and Sun Microsystems.
I think we're in for another week of low volumes and directionless trade. Investors will continue to act cautiously until specifics of the package become clear.
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