On Monday’s morning note, I commented that “Bulls remain on parade, and the much anticipated pullback that many expect hasn't happened. At this point, it is starting to feel like a pullback might not happen for some time.” What a difference a day makes. Equity markets across the globe got pummeled yesterday after S&P downgraded Greek sovereign debt to junk, while also downgrading Portugal’s sovereign debt rating one notch. These downgrades strengthened fears that a sovereign debt crisis is officially spreading throughout the Euro zone. 

 Friday's trading action concluded the eighth consecutive weekly gain for the major U.S. equity indices, as the Dow, Nasdaq, and S&P 500 now sit at fresh 19 month highs. In fact, all three indices rest just shy of where they traded prior to the Lehman Brothers bankruptcy in early September 2008. Bulls remain on parade, and the much anticipated pullback that many expect hasn't happened. At this point, it is starting to feel like a pullback might not happen for some time.

 Already in the midst of a public relations crisis, Goldman Sachs was hit with another blow on Friday when the SEC sued them for fraud in regards to a collateralized debt obligation (CDO) they structured. This proved to be the catalyst the U.S. equity markets were looking for to stage their first significant sell-off in two months. Despite the sell-off on Friday, however, U.S. equities did move higher for the seventh consecutive week, with the Dow continuing to close above 11000.

 U.S. equity markets registered their sixth consecutive week higher on Friday as stocks rallied into the close.  The Dow briefly surpassed 11000 but closed at 10997.35, while the S&P 500 closed just shy of 1200 at 1194.37.  The 11000 and 1200 levels on the Dow and S&P 500 continue to be significant psychological and technical hurdles, that if breached could propel the markets higher in the short-term.

 Yesterday was yet another grind it out kind of a day for the U.S. equity markets. The Dow posted a modest decline, while the Nasdaq and S&P 500 posted modest gains.  Lower volume and lower volatility has been then theme, particularly over the past month, as daily trading ranges have been much tighter and mostly to the upside. This is evidenced by the VIX, a measure of expected future volatility for the S&P 500, which closed yesterday at 16.23, its lowest level since October 2007.