Last week we made a tactical decision to step aside and not publish a short-term portfolio. In our view the cross currents in the news-driven situation did not give us an 'edge.' The timing turned out to be excellent. The market put in a head fake for the bulls and corrected more than 4%.

This week, we are still not interested in buying the dip. Why? The major indices are testing the up-gap that occurred at the end of November. Such moments of enthusiasm are almost always revisited when the market is no longer surprised. The purpose is to check for a consensus among buyers and sellers. If sellers do not rush in around that area, then the breakout is assumed to be a valid move and less emotional buyers will step in.

Bulls and bears are evenly matched at this time, which means rallies are being sold and dips are being bought on a short-term basis. This is options expiration week, however, which often means that stocks get pinned to strike prices and do not move for a few days.

... and other mistaken prognostications.

Nouriel Roubini played right into the gloom and doom last Wednesday, saying in an interview that government gridlock ‘Ensures’ a 2012 Recession, and an hour later he said that the IMF does not have enough money to save Europe, and  "The contagion has now gone viral, cross Atlantic and global."…"It's a slow-motion train wreck."  He predicted, "at least a 50% probability" of a breakup of the eurozone in the next 2-to-3 years, which would almost certainly lead to a fast-motion train wreck.

Meanwhile, also last Wednesday, Pimco's Mohamed El-Erian told Bloomberg TV that U.S. economic conditions were "terrifying" and he cited the disappointing report that day on anemic U.S. economic growth and the Super Committee stalemate as delivering odds of one-third to one-half of another recession.

We argued that the European situation had become so dire, literally overnight, that there was no alternative left for world economic leaders but to do something dramatic, and do it immediately. There was no room for error, and so there would not be any error. It was must-do, and must-do right then.

The most important factor of the current market from a trading perspective is the sudden 25% decrease in volume over the last week or so, although there was a bump up yesterday. Low volume indicates that professional traders and funds are waiting for resolution of the European situation before making a move. It also means that daily volatility should largely be ignored because any moves, in either direction, that occur on low volume have been shown to be unpredictive of future movement.  It is a lot like trading very close to a holiday - large moves can happen, and they mean nothing. Real direction is determined only from periods of normal volume.

Another round of asset purchases (mortgage-backed securities) is a viable option for the Fed. Bernanke reassured the audience that “We are prepared to do more and we have the tools to do more.” Here's the good news and the bad news. When the Fed starts its third round of quantitative easing (QE III), the ECB is likely to follow.

Considering that European banks need to raise capital, they will naturally have to cut back on lending, which will remove a great deal of natural stimulus, tipping the Eurozone into recession. Mario Draghi, the new ECB head, will then likely join the Fed in shifting his focus from worrying about inflation to preventing deflation.

Unfortunately, that will reduce the spread between the Euro (1.5%) and the buck (.25%), weakening the euro and strengthening the dollar. If that happens, the U.S. indices will face a headwind. Hopefully, Mario will drag his feet on that point.

This week we profile five World Stock ETFs.  All but one of these funds excludes the U.S.  These funds vary from small-cap world stock ETFs to total market world stock ETFs.

This week we profile a few African ETFs as well as some Middle Eastern funds and a Canadian ETF.

Consumer confidence numbers came in much worse than expected, hitting a 10 month low. That is a sobering figure considering that the stock market was near its lows 10 months ago. In other words, the 60% rise in the equity market is not boosting confidence on Main Street.

Of course, anyone tuned-in to the conditions on Main Street could have forecast the disappointment for the rank and file. The grassroots U.S. economy is flat on the mat due to a tight business and personal credit environment, contraction in the public sector and unmitigated unemployment/underemployment. U.S. bank lending fell 7.5% last year, the largest yearly decline since the 1940s.