Chris Ciovacco: Numerous problems are facing investors:

1. The flawed structure of the Eurozone is coming back to haunt global leaders.  The markets want the European Central Bank (ECB) to print money, but  the golden rule applies: “He who has the gold makes the rules.”In Europe, Germany “has the gold”.  Germany has seen what money printing can do and thus, is vehemently opposed to cranking up the printing presses.
2. Back in the United States, the Super Committee signaled over the weekend they may fail to reach a budget agreement before a fast approaching deadline.
3. Global growth is being threatened by a vast amount of uncertainty.  If Europe tips back into a recession, which appears likely, it becomes even harder to access the bond markets at sustainable rates of interest.
4. From a technical perspective, as detailed in the video below, numerous concerns remain, including new bearish developments on the weekly chart of the S&P 500.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.

If the S&P 500 (NYSEARCA:SPY) fails to hold between 1,191 and 1,209, a crack may appear in the door allowing stocks to revisit the October lows. A case can be made for support near 1,180 as well.  If the S&P 500 can remain above 1,180/1,191, another push toward 1,240-1,280 cannot be ruled out.  In either case, the odds remain in the bearish camp longer-term.  Consequently,  conservative/deflationary/bearish assets, such as bonds (NYSEARCA:TLT), the dollar (NYSEARCA:UUP), and shorts (NYSEARCA:PSQ), are attractive looking out several weeks to several months.

Other concerns remain:

1. As we outlined on November 4, the ratio of gold (NYSEARCA:GLD) to Tresuries (NYSEARCA:TLT) has yet to confirm the rally off the October lows.
2. The NASDAQ typically leads the S&P 500 during sustainable rallies.  The NASDAQ has been a laggard in recent weeks (see article).
3. Copper has also failed to confirm the recent run by the bulls.
4. The European credit markets are showing signs of stress that exceed what we experienced in 2008.

If the ECB relents and decides to print money, all bearish bets are off.  However, given Germany’s stance that appears unlikely in the short-term.  Over the next few months ECB money-printing becomes more and more likely.

Written By Chris Ciovacco From Ciovacco Capital Management, LLC

Chris Ciovacco began his investment career with Morgan Stanley in Atlanta in 1994. With a focus on global macro investing, Chris uses both fundamental and technical analysis to assist in managing risk while  looking for growth opportunities around the globe in all asset classes.  If you are looking for an independent money manager or financial advisor, Ciovacco Capital is worth a look. Chris  graduated from Georgia Tech with Highest Honors earning a degree in Industrial  and Systems Engineering in 1990. His experience in the professional  ranks began in 1985 as he began working as a co-op for IBM in Atlanta.

Ciovacco Capital Management, LLC (CCM) is an independent money management firm serving clients nationwide. By utilizing extensive research, disciplined risk management techniques, and a globally diversified  approach, CCM prudently manages investments for individuals and business owners. Our focus is on principal protection and purchasing  power preservation in an ever-changing global investment climate.

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