Clive Corcoran is inclined to be less cheerful about the signs of economic recovery when the US government is on the verge of doubling debt service costs.

The daily chart showing the yield on the US 10-year note shows that traders have brought the current yield exactly up to a potential breakout level which could be triggered in today’s trading.

Even though the tone of the overall market remains decidedly bullish, there are a few negative technical divergences starting to manifest themselves which could become more significant in the medium term.

Media chatter indicates that many market participants seem not to be at all fazed by the potential for disruptions in the Middle East - just keep buying the dips! - but the VIX as a useful barometer of market sentiment sends a rather contrary message.

Security concerns and the uncertainty about the eventual outcome of the uprisings now being seen in Egypt and other states in the region are likely to produce some emotional trading activity in the weeks ahead.

Standard & Poors has reduced its sovereign credit rating on Japan from AA to AA-. How likely is it that this credit rating will continue to erode and lead to funding problems for the Japanese government?

GBP/USD was whacked hard this morning after the GDP statistics for Q4, 2010 were released.

The best sectors to be short when markets correct are those with high beta, and this is certainly a characteristic of the Russell 2000.

IYT, an ETF which tracks the DJ Transportation sector, has sold off for two sessions on increased volume but has chart support.

While the longer-term outlook suggests that a move towards the high 1300’s for the S&P 500 is certainly feasible this year, the easy money since the March 09 recovery is behind traders.