Turnaround Tuesday on Potential Greek Rescue by EU

more specifically by Germany, the piggy bank of EMU.

The U.S. stock market followed European bourses and spiked up on the news that there may be a rescue package for Greece, after all.

Wall Street climbs on reports of aid for Greece
(2/9/2010 Reuters via Yahoo Finance)

"NEW YORK (Reuters) - Stocks rose broadly on Tuesday, with the Dow on track for its largest daily percentage advance since July, on reports euro zone countries will come to the aid of debt-stricken Greece.

"The U.S. dollar fell against the euro, boosting commodity prices and shares of natural resources companies.

"A senior German ruling coalition source said euro zone governments have decided in principle to help Greece and that various options were being considered.

""I would see that as good news (for the stock market), knowing that there's a backer there, that those nations will be able to back up the (Greek) debt," said John O'Brien, senior vice president at MKM Partners LLC in Cleveland." [The article continues.]

They will find out what the German taxpayers and voters would say to the rescue of the Club Med member. German bunds tanked on the news. US dollar is dumped, as the need for "safe haven" has seemingly diminished, boosting the commodity prices.

The US dollar index (DXY) currenty sits at 79.79, right below the decades-long support/resistance of 80. A logical place to turn back technically.

It remains to be seen if this is simply a much-awaited DCB (dead cat bounce) after 4 dismal and often scary down-weeks, or if those 4 weeks are a part of the pattern that has already happened twice (see my TA blog).

After Greece, Spain, Portugal (where public union workers are planning a strike to protest wage freeze) will be waiting. So will Ireland and Italy. Germany's backyard - Central and Eastern European countries - is not quite sanguine, either.

If Zero Hedge is correct, it may be just a transfer of money from one piggy bank (Germany) to another (Vampire Squid). It is remniscent of a currency trade executed to perfection by George Soros in the early 1990's against the UK government.

You would almost have to admire the gall of these traders, and the total lack of morality in executing the trades...

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