Wednesday, August 31, 2011 4:38 PM – Waiting for Employment Report – Stocks are Overbought

Stocks were up, gold was down, bonds were flat. Stocks are really overbought here and have reached a resitance level. Stocks probably need a breather or they will head down. That’s not in stone – markets can stay overbought but odds are against significant further gains right away.

European stocks were up 2.5% – 3.4% based on news that German Chancellor Angler Merkel may have put together the votes she needs for the latest Greek bailout and that Finland says they think they can come to an agreemnt on the bailout. Since any EU country can veto bailout measures, the Finnish call for Greece to put up collateral has been a sticking point. There is still the German Supreme Court ruling on the bailout measure which may take a week or two to announce.

I would not look for much in the way of gains from stocks tomorrow. The market wants to see the employment report on Friday morning. Economic numbers this week have not been encouraging though there were a couple of bright spots.

At&T suffered a blow when the Dept of Justice ruled against AT&T’s proposed takeover of T-Mobile. The DOJ did leave the door open for AT&T to come up with significantly more proposed divestitures since the two companies have a great deal of overlap in where they do significant business.

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