The combination of the quick start and afternoon pullback resulted in a doji candle.

Bank of America (NYSE: BAC) stock is up 6.3% in pre-market trading this morning after the bank reported improved earnings.

In the wake of one of the most volatile years ever for stocks, safety will be a key theme among investors in 2012.  

A 32% interest rate is unheard of in a normal market. But as many investors and traders understand, the market is far from normal these days.

Considering everything that has happened over the course of the past quarter I can't really blame investors for being skeptical.

Don't let anyone tell you that you shouldn't short stocks.

Italy, Greece, Portugal and Spain are all in big trouble... Fortunately for you there's a great way to profit from their unfortunate mess.

"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.

I seem to recall EU leadership stating that it would not be dictated by the market. The point was that Europe needed to find the right solutions for its problems, and that it wouldn't be forced to rush that solution based on fluctuations in the financial markets... But that was before the yield in the 5-year Italian note hit 7.7%, as it has this morning.

Yesterday, a Euro Central Bank official was credited with sparking a rally when he said that the European debt crisis should be resolved in a year or two. That's a pretty flimsy reason for a rally, if you ask me.

Making payments on the principle is no longer a realistic expectation for these countries.

It seems unlikely that Greece can undo decades of bad spending decisions with a simple bailout by its European neighbors.

Greek Prime Minister George Papandreou recently announced he would put the proposal to a referendum vote in Greece.

The market and the euro both tanked following the news out of Greece last week.

While I don't view Greece as an issue, a slowdown in Europe would be a big deal.

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.

One thing that seems to be missing is the timetable for Greek default. It would be good to know exactly when the Euro-banks have to book the losses.

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.

Goldman Sachs (NYSE:GS) Chief economist, Jan Hatzuis is forecasting 0.5% GDP growth for the first quarter of 2012. He also predicts that the Fed will announce QE3 in the next 6-9 months.

Google (Nasdaq:GOOG) knocked it out of the park last night. The company earned $2.7 billion on $9.72 billion in revenue for the third quarter. That revenue number represents a 33% gain over last year.

The market zoomed higher yesterday and volume levels rose. The bullish action was the product of two things.

First, SPX has extremely strong support at 1115 and 1100; the bears need a Greece failure, or something similar, to take the index below that support zone.

Secondly, rumors from reliable sources, like Geithner, have surfaced that European governments will step up their response to their region's debt crisis.

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.

It's hard not to miss the tone of Germany's leader, Angela Merkel, who, over the weekend, said Europe must be able to put a "firewall" around Greece to prevent a cascade of market attacks.

Forgive me if I am forced to delve into Europe and its debt again today.

Germany and France say they will continue to support Greece with bailout money. Greece says austerity measures will be implemented to get that bailout money.

It's becoming increasingly likely that Greece will default on its current debt obligations. Germany just doesn't seem to have the will to continue with bailouts. 

If (when) Greek defaults, European banks will suffer losses to their capital base. They may have to raise cash with secondary offerings and perhaps sell assets., and U.S. money market funds that own European bank debt will likely have to do some maneuvering.

The bigger issue for Europe is Italy and Spain. These two are much bigger than Greece.

The market tanked on Friday and it appears ready to tank again on Monday. Volume was high as SPX shrank nearly 3% and the bulls lost 1175 support. The declines were everywhere, but financials once again fell the most.

Financials are down 18% in the last three months and 25% in the last six. Big banks have taken the brunt of selling this year and for good reason. Economic conditions have weakened and European nations could still leave the euro zone or declare bankruptcy.

The market was slammed again on Friday. Volume was light, due to the holiday, but the indices slipped by over 2%. Once again financials led the charge lower and the big banks like JPM, WFC, GS and C were down nearly 5% while BAC lost 8.3%. And the worst of the decline is not over.

The FHFA sent lawsuits to 17 banks. And the amount that was sought is in the billions of dollars. But the fear on the street is that if banks pay one settlement for a fraudulent mortgage, hundreds more cases will follow. And with $5 trillion in questionable loans, the banks are on the hook for a large sum of cash.

For the U.S. economy to sink back into recession, or for corporate profits to make a meaningful decline, consumer spending must contract. It really is as simple as that.

And the simple fact is: the American consumer has been steadfast since the financial crisis.

We see the results of consumer confidence polls swing wildly. Respondents can be ecstatic one month, and despondent the next. The last University of Michigan survey showed the worst number since November of 2008.

All good things come to an end, and the curtain came down on a three-day run-up in small-cap stocks on Tuesday.

The Russell 2000 Index fell for the first time since August 10, after the index had rebounded from the recent sell-offs by nearly 9 percent.

Yet there were some rising stars to be found across many sectors, including old-line and high-tech manufacturing, biotechs and software developers and a couple of acquisitions.

Bad news from Germany this morning. Europe's one economic bright spot reported lower than expected GDP growth for the second quarter.

This shouldn't be too big of a surprise, though, because we've known that Europe has been struggling with debt, and austerity measures are causing big slowdowns in the afflicted countries. Greece, for instance, saw its economy shrink 6.9% in the latest quarter.

On the upside, industrial production expanded more than expected. The 0.9% gain was the biggest jump this year and the first increase since March. This is related to the earthquake/tsunami that Japan suffered earlier in the year...

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.

Well, Alcoa (NYSE:AA) managed to meet on earnings, and beat on revenue. All in all, I'd say that's pretty good. I'll also say it's a darned good thing Alcoa came in good. After a day like yesterday, investors needed some good news, or at least some "not bad" news.

The S&P 500 dropped below support at 1,320, though only by a point. Volume wasn't particularly heavy, so we shouldn't read too much into the 1,319 close. In fact, yesterday had all the makings of a bear trap: negative headlines, a drop through support, right at the outset of earnings season.

Of course, we will need to get some more positive earnings news to turn the tide. And we will have to wait for Thursday when JP Morgan (NYSE:JPM) and Google (Nasdaq:GOOG) report.

Now, here's some reader mail.

The market was destroyed yesterday. Volume wasn't meaningfully high, but it was better than the past few sessions. The market ripped lower yesterday morning following concerns that Italy was near a default. And the indices continued to trickle lower into the close.

Most indices finished 2% lower in yesterday's bloodbath. But even that percentage seemed low since most of the stocks I followed declined over 4%.

I can't argue against the strength of yesterday's decline. The selling pressure was strong and it was a continuation of Friday's sell-off. But I can't believe the selling was due to Italy.

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 market continued its decline yesterday, although the momentum waned. Despite hitting new lows the indices bounced nicely into the close and protected their March low. Volume was also high

Well that didn't take long. Just a day after it was reported that Greece will benefit from a debt restructuring that will require current bond-holders to take a financial hit, Ireland's finance ministry is demanding a similar restructuring for its bonds.

Of course, this is what happens when you open the door to restructuring. In a union, all rules must apply equally. You just can't give preferential treatment to one country and not expect others to demand the same treatment. The European Central Bank should have known this. And its failure to see this one coming is making the situation even more unstable.

The market finally rallied yesterday. The past six weeks have been a slow push lower, but yesterday the bulls finally decided to come back into the market.  Volume levels were alright during the

The market's bid to break its 6-week string of losses is back to square one. The EU promised to have a solution for Greece hammered out this month. It's clear now that Greece is going to do a polite default. That is, its debt will be restructured so that current bond holders take a haircut and receive new debt designed to give Greece a little breathing room.

But so far, they can't agree on how to structure the deal.

When I saw the headline that “Greek Aid Package to be decided by June” my first thought was “Great! That’s tomorrow…”

 

But of course, first impressions can be deceiving, as can misleading headlines.

 

The deadline for a(nother) Greek bailout is the end of June, which means we get to hear about for another month. I’m sure you’re very bit as excited about that as I am.

The U.S. dollar and Treasury bonds are weaker today after the Group of 8 said the global economy was growing and the perception of Greek debt problems improved.

 

As we know, a weaker dollar sets the stage for higher stock and commodity prices. Oil is perhaps the best indicator of economic growth expectations. And its inverse correlation to the U.S. dollar is also airtight. So much so, that if you see oil rally, bullish economic commentary is usually not far behind.

The fact is, the stock market rarely sells off for one reason. The issues from Greece might be making all the headlines, it's not the only catalyst. Economic data has been weakening, the end of QE2 is looming, government spending is likely to get reigned in, albeit slightly, and the stock market has been on a remarkable run since last August.