12:30pm (EST)

The bears have pushed the market lower to begin the week as concerns over sovereign debt in the euro zone have trumped the good retail news the bulls were banking on.  The $113 billion bailout package for Ireland should have been a headwind relief but investors are worried that other countries will need a bailout, mainly, Spain and Portugal.

The Irish bailout is having a negative effect on the euro and has pushed the currency to a fresh two-month low versus the U.S. dollar.  We like to track the CurrencyShares Euro Trust (FXE, $130.49, down $1.49) when following the euro for possible trade ideas and here is what we said on November 12 (stock quote from that day):

“We have been mentioning the correlation between the dollar and the stock market, which has worked against each other, and the support for the dollar has come over the eurozone’s sovereign debt.  Also worth mentioning is the euro which is about to break key support levels. 

Specifically, you can watch the CurrencyShares Euro Trust (FXE, $136.07, down $1.17) which are in a ”trading range” but it appears there will be a breakdown instead of a breakout.” (END)

A break below $130 could lead to a test down to $125 where there is decent support for the FXE.

The strong results from Black Friday are now an afterthought with “Cyber Monday” in full swing today.  Despite the market’s woes, Amazon.com (AMZN, $179.50, up $2.30) and FedEx (FDX, $90.11, up $2.61) are trading higher today and look well-positioned for a continued run during the holiday season.

Amazon made a fresh all-time high of $178.38 on Friday, and has touched $181.84 today. 

Shares of FedEx have a 52-week high of $97.75 and could push $100 if the momentum continues from today’s 3% pop.

As far as the market, the major support levels we went over Sunday night have come into play but there doesn’t appear to be any panic selling.  As long as the bulls can hold the current levels and the lower levels of support we have outlined, we feel there is still a chance the market can break through resistance.

The Dow is currently down 115 points to 10,976 and has fallen below the 11,000 level.  We think the 10,950 level can hold as these support levels can get stretched but there is additional support in the 10,800 region.

The S&P 500 is off by 10 points and is at 1,179.  We have outlined the 1,170-1,175 zone as strong support with backup at 1,150.  Resistance is strong at 1,200 which has outlined the current trading range the index has been stuck in since the middle of the month.

The Nasdaq is getting chopped for 26 points and is at 2,508 which is the first wave of support.  The index has trade to a low of 2,496 and there is further support at 2,450 while 2,600 remains resistance. 

We expect trading to heat up for the rest of the week as economic news starts to hit the street.  Wednesday will be a big day for jobs data and if it is better-than-expected, it could give the bulls the energy to make one last push higher.

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