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Two Ways: Banking Powder Keg in Eastern Europe?


Strengthen your portfolio in good times and bad.

Another ugly day for Wall Street today. A story in the Financial Times detailing Moody's warning of increased risks in Eastern Europe's banking system sparked more bank jitters.

The firm said it expects more downward pressure on bank ratings in the region as asset qualities deteriorate, local currencies decline, and the housing slump persists.

Moody's says at most risk is the Austrian banking system, with Eastern Europe accounting for over half of its foreign loans.

Separately, an analyst at Commerzbank said that, as the credit-worthiness of banks and households continue to falter, so will the stability of currencies, risking ultimately the viability of the euro.

For more on the economy, see Professor Kevin Depew's Five Things: Markets Lose Faith.

From the Bull Pen: Gloomy story indeed. But bulls can look to Wal-Mart (WMT) for a trade. Toddo mentioned this as a green bean in a sea of red. A sell stop can be set near today's low - $47.30.

From the Bear Cave: Bears can even consider Professor Mike Paulenoff's analysis of the Q's (QQQQ), mentioned on today's Buzz. Plenty of evidence suggests further downside activity, he said, and only a trade above $31.70 in the near term would negate a potentially very bearish development.
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No positions in stocks mentioned.

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