The market initially rallied on Wednesday, as Asia and Europe took our Tuesday reversal to heart and rallied overseas. That was followed by positive Durable Goods and New Home Sales data. As much as we fully anticipated seeing a spike in New Home Sales, as this is based on “contract signings” which was required by the end of April, the number going over 500k was a pleasant surprise. Yes, this is stimulus induced buying, but it is absorbing inventory nonetheless. With the technical supports providing the bounce on Tuesday, the momentum carried through on Wednesday. All was fine until the Euro started to slide. The catalyst was that China was reviewing their European bond holdings. The statement itself shouldn’t be all that unusual. One would think any portfolio would review its holdings, especially when they are getting killed. However, this comment sent the Euro under Tuesday’s intraday low, a new 4 year low, which spiked the Dollar and sent the US markets sliding. Tuesday’s low was a good low, but I can see why one would worry about the Chinese selling their bonds. Heck, our market, currency, and bond market gets spooked every time traders think the Chinese may not be buyers. China has denied that it intends to take any action, and the negative move is being reversed here. The Euro is rallying back this morning. As we get into June, I expect the outlook for corporate profits to carry more weight over expectations, and that should be good news for stocks.