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Two Ways To Play: Abu Dhabi Rescues Dubai


Strengthen your portfolio in good times and bad.

Abu Dhabi to the Rescue

Global risk appetite improved overnight after Dubai said it received a $10 billion bailout from Abu Dhabi.

The Financial Times reports the Dubai and Abu Dhabi stock markets surged 10.4% and 7.9% respectively after the announcement, while credit default swaps (CDS) on Dubai's sovereign debt plunged to 417 basis points from 540 basis points.

Asian bourses also rejoiced on the news. Japanese stocks had been trending lower prior to the announcement. The Nikkei 225 then pared most of its losses but still ended in the red. Chinese stocks gained as well as in Australia, where the S&P/ASX 200 added 0.4%.

From the Bull Pen: This bailout isn't much of a surprise to the bulls, and it's the main reason why global equity markets have rallied since March -- the increased roles of governments around the world. One can continue to look to the iShares Emerging Markets ETF (EEM). In the short term, one can set a sell stop near $40.50 (a recent low as well as the 50-DMA).

From the Bear Cave: The risks for equity markets remain to the upside, so bears must selectively look for individual opportunities. Watch if RadioShack (RSH) will stall at $20.50 resistance. Those testing the downside can set a buy stop above that level.

For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.

A Quick Check Around the World

Asian trading closed with the Nikkei 2.48%, India -0.41%, Hang Seng 0.93%, Shanghai -0.21%, and Taiwan 1.53%.

Across the pond, we see the FTSE 0.85%, CAC 0.52%, DAX 0.82%

As of 8:25 AM EST, S&P Futures are trading +6.25 to 1109.50. Nasdaq futures are +11.75 to 1803.750

A Look at Commodities

Over in commodities, crude oil is -0.88 to 68.99 while gold is +2.800 to 1122.70 this morning. Silver is +16.00 to 1725 and copper +1.800 to 315.10.

The dollar Index is -0.1250 to 76.8300.

No Economic events on the radar today. Later this week, we have PPI on Tuesday, CPI and FOMC on Wednesday, leading indicators and more on Thursday. Click here for the full trading radar.

Have a great week.
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No positions in stocks mentioned.

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