Here are three reasons why no one cared about a 15 nation downgrade threat.

But like curing a hangover with "the hair of the dog" this central bank gift will do more harm than good in the long run.

"Debt crisis" and "bankruptcy" have become commonplace terms in most of Europe. And it's not just local businesses that are underwater and can't make interest payments either; it's countries.

Wednesday's large decline was the result of only one thing: the higher interest rate on Italian debt.

Bank of America (NYSE: BAC) missed earnings estimates badly, and tech behemoth IBM (NYSE: IBM) came in light on sales.

Today is another big day in the market, and the bulls clearly have the momentum.

I don't want to get overly excited to be a bull here, but for the time being, I think yesterday could be a key swing low.

October 3rd was the first trading day of the month, and the S&P 500 dropped 32 points. Yesterday, October 31, the S&P 500 dropped 32 points. Coincidence? Absolutely.

Earnings season has been a success so far, with roughly 70% of the S&P 500 companies that have reported so far beating expectations.

The risk for Europe is not doing enough. If you give Greece debt forgiveness of 30%, but Greece still can't make its payments, then you haven't really accomplished anything.

It's almost as if the EU and the U.S. Congress are in a contest to see which group can do the most damage to the global economy.

There's a rumor making the rounds that EU will forgive 50% of Greek debt and increase the ESFS bailout fund to 2 trillion euros.

The Lisbon Treaty was signed by EU member nations in 2007, as a sort of make-up treaty to correct some of the mistakes from previous EU treaties. Turns out, there's a "no bailout" clause in the Lisbon Treaty. Who knew?

And by the time you read this edition of the Daily Profit, Germany's Constitutional Court will have voted as to whether the EU's bailout fund for Greece et al violates Germany's democratic constitution.

The market ripped higher yesterday after a consolidation session on Wednesday. Volume was jacked as the indices overcame short term resistance areas and pushed up towards fresh highs.

The market had a lot going in its favor yesterday. First, second quarter earnings have been good thus far, and the market is still riding on the bullish sentiment following AAPL, GOOG, IBM and the rest of the great technology earnings reports by big companies. Second, the EU finally got its act together and formed a bailout package.

Yesterday was an interesting one for the stock market. There was plenty of negative news hitting the wire -- from the EU's continued inability to decide on a course of action, to the continued standstill of our own budget debate.

But investors glommed onto a suggestion from the minutes of the last FOMC meeting that QE3 could happen if the economy continues to struggle, and stocks rallied sharply right at 2 pm. The mini-rally reversed just as quickly as it began.

The stock market would clearly like more quantitative easing. But it would not be a good thing for the economy in the long run. It is time to let this economy slog through the housing problems and the unemployment problems without flooding the market with cash.

Over the weekend, new capital requirement rules for large banks were finalized. Known as Basel III, these rules will add as much as another 2.5% to some banks Tier 1 capital. That brings the total to as much as 9.5% for banks that are deemed to be too big to fail.

These new rules are designed to keep banks from over-leveraging and causing a repeat of the financial crisis. But it should also be clear that even a 9.5% Tier 1 capital requirement is not a big requirement. Banks will have no trouble raising their Tier 1 capital to the new levels by the 2019 deadline.

In reality, this is a token move and won't affect the banks much. It definitely doesn't do much to prevent another crisis. But it may be good news for banks stocks. One reason for the recent weakness in bank stocks is uncertainty of new financial regulations. With this Basel III agreement, some of that uncertainty is removed.

The pundits agree. It's a technology bubble. And all because social media stock LinkedIn (Nasdaq:LNKD) now trades with a P/E of 600 on a paltry $15 million in trailing earnings.

Ireland will never be able to afford to pay back the debt it owes. Its debt problems are but a microcosm of much of the rest of the western world. What is playing out in Ireland today will one day soon play out here across the pond in the United States.

So we should pay close attention, because for reasons I will reveal below, the scenario is hugely bullish for commodities of nearly every stripe.

To sum up Ireland’s problems, it recently received a bailout from its chums in the European Union so that the country would avoid default on the many and sundry debt obligations already under its belt.

The recent bailout adds another $115 billion to the already $867 billion they owe, bringing the grand total to $982 billion.

Here in the land of $13 trillion debt loads, anything without a T in front of it starts to sound pretty insignificant.

The Bank of Ireland is about to have a new majority shareholder. Ireland's government is expected to raise its stake in the Bank of Ireland from 36% to something constituting a majority.

The Irish government is also expected to raise its stake in Allied Irish Bank to, potentially, 99%.

If this sounds like Ireland is taking a page from the U.S. bank bailout strategy you're right. When you're facing the potential of a run on the banking system, the government is essentially the last entity that can to step in and provide a backstop.

Ireland agreed to terms for a bailout over the weekend. And while the U.S. dollar rallied today against the euro, investors should expect that trend to reverse in the near future with the dollar continuing its long term slide against major world currencies.

The European Union's willingness to support indebted member nations is bullish for the euro. Also, the Fed's QE2 will continue to weigh on the U.S. dollar.

It’s one of those situations in investing that often defies logic - and leads to big opportunities. When the majority of investors become convinced that a trade can only go one way, well, it often doesn’t.

 

And as I’ll show you, there can be easy gains to be had when you understand this.

 

For this example, I’m talking about the U.S. dollar.

 

You’ll probably recall the vicious downtrend the dollar entered in the two months leading up to Ben Bernanke’s second round of quantitative easing.

Oh boy. The absurd quotes from EU officials just keep rolling out. This time, the chairman of the Eurogroup forum of euro zone finance ministers Jean-Claude Juncker said that, “There is a certain reluctance to believe the Greeks can overcome the current crisis. I don't think the markets are behaving in a rational way.”  

 

Rational? Did he really suggest that financial markets should be rational?   

 

In many ways, this quote exemplifies the attitude that led the EU to completely botch the Greek debt situation and invite investors to start selling the euro.   

It’s often said that the stock market doesn’t like uncertainty. When uncertainty rises, stock prices tend to fall.  

 

When Lehman Brothers filed for bankruptcy protection on September 15, 2008, it started a landslide for the S&P 500. Investors didn’t know what toxic assets other banks were holding, so they sold. Banks became suspicious of what other banks might be holding, so they stopped lending.    

 

It may seem incredible that we’re still talking about Greece’s debt problems, but the reason we are is due to the amount of uncertainty that is dredged up by the Greek situation.   

Before May, there were plenty of investors wondering if the stock market had gotten too far ahead of the economy. Sure, stock valuations themselves have stayed within historic norms, supported by strong earnings growth.

 

But with unemployment stuck at persistently high levels, ongoing imbalances in the economy, and record high budget deficits, it’s reasonable to wonder how long earnings growth can continue. Now, after the debt issues with Greece have revealed some serious dissension in the European Union and questions about the future of the euro as a currency, we’ve seen an abrupt reversal. 

At last week’s lows, the S&P 500 was down 9.6% from its highs. Oil prices are down 20%. 

On Monday, when it was apparent that we were in for a big day as futures went limit up in pre-market, I said I wanted to see a candlestick pattern called “three white soldiers.”  

 

Three white soldiers basically means three pretty good sized up days in a row. This pattern is considered very bullish, especially after a period of consolidation. And the reason it’s bullish is fairly easy to deduce. 

 

A period of consolidation for a stock means that not much is changing. The buyers and sellers are pretty much in agreement as to what it’s worth. And so the price doesn’t change much. 

Investing in gold is often called a “fear trade.” In times of crisis, it’s believed that gold will hold its value, and even rise, while the value of paper currencies and other assets fall.  

 

If you bought SPDR Gold ETF (NYSE:GLD), which seeks to track the price of physical gold, 2 years ago, you’d be up around 36%.   

 

The S&P 500 is down around 15% during that time.   

 

You probably already know that gold hit a new all-time high yesterday at $1,200 an ounce. And even though other traditional measures of fear – like the volatility index (VIX), bonds and even stocks – didn’t move much today, the move in gold can’t be ignored.  

Apparently, the going rate for a 404 point rally on the Dow Industrials is $1 trillion. Any takers? Going once… 

After stocks lost $1 trillion during that surreal 2 minute stretch last Wednesday, it’s nice to get that market-cap back. But there is still work to do. 

Yesterday’s rally took the S&P 500 within range to challenge resistance at 1,165. It will be important for the S&P 500 to move above this level today.

As Germany voted to approve bailout money for Greece, German Left Party lawmaker Gesine Loetzsch was quoted as saying "Speculators are Taliban in pinstripes, and people in our country must be protected from these Taliban…”  

 

It’s scary to me that any political leader could voice such an inflammatory and downright naïve opinion.   

 

If a hitter in baseball can’t hit the high fastball, then that’s exactly what he will see until he makes an adjustment. When Yahoo! failed to take advantage of its early-mover status on the Internet to implement a viable paid advertising model, it opened the door to Google.   

Just yesterday, we discussed how stock market plunges can be set off by what amounts to a “global margin call.” And that’s exactly what yesterday’s decline felt like, as the selling was relentless.  

 

There were no bounces, no dead-cat rallies as the selling built pressure built until it reached its crescendo.   

 

That crescendo, a 998-point spike lower on the Dow Industrials, was caused directly by some computer-based trading programs gone haywire. (There’s no other way to explain how Accenture (NYSE:ANC) could drop from $40 a share to a penny.)  

Has anyone else noticed that volatility has picked up in the stock market?   
 

It started on April 23, when the S&P 500 closed at 1,217. On that day in Daily Profit, I mused how investors were looking past the Icelandic volcano and the SEC charges against Goldman Sachs and simply buying stocks.   

 

I also discussed the possibility of a trend change that day. And I think it may be prudent to revisit that discussion today... 

It was two weeks ago that I likened the ongoing Greek debt saga to a slasher flick bad guy that keeps rising from apparent death. The Greek story is truly one that will not die.  

 

It should be clear by now that none of the parties involved are playing it straight. Greece has made several misleading statements about the size of its debt and its plans to pay it off. Germany has reneged on its promise of support several times.   

 

Even the aid talks with the IMF seem to be taking far too long. In fact, this Greek aid process is taking so long that investors are starting to speculate that Portugal will not be able to get aid quickly if it needs it.   

How many times will we see the headlines say that an aid package for Greece is ready to go into effect? Talk about dysfunction, the way the EU and Greece has handled this situation, it’s no wonder that investors are demanding extremely high premiums to handle Greek debt.   

 

It’s pretty clear that Greece needs a lump sum loan from either the EU or the IMF. I don’t care which. But please, just get it done so we can stop all the drama.   

 

The Wall Street Journal is reporting that banks have been pulling a fast one on investors for the last year...