BY Billy Fisher:

Contributor, Stock Traders Daily

Real Time Trading Reports:  Included are detailed trading reports designed to help investors realize opportunities in these companies.  The reports are linked to the stock symbols in the article below.

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(La Jolla, CA) The equity markets have begun to bounce back in 2009. For instance, the SPDR S&P 500 ETF (NYSE: SPY), which is designed to track the performance of the S&P 500, has surged 22.0% year-to-date. This ETF now sits at a 52-week high and there has been a significant amount of optimism in the air lately. Could we be getting ahead of ourselves?

Time to Reassess

The optimism being felt in the U.S. is not necessarily universal across the globe. In fact the European Commission provided France, Spain, the U.K. and Ireland an additional year to bring their budget deficits back into line.

As the impact of the global economic downturn had made the previous deadlines seemingly unrealistic, the commission gave France and Spain until 2013 to move budget deficits back under the European Union limit of 3% of GDP. Ireland and the U.K. now have until 2014.

This reassessment by the European Commission seems to indicate that the group has grown somewhat cautious on long term recovery prospects. Earlier this month, the commission issued a forecast projecting that the European economy may expand 0.7% in 2010 and 1.5% in 2011, after contracting 4% in 2009. While these projections are certainly good news, they aren’t exactly gangbusters.

Abundant Trading Opportunities

Over the long run, it should prove to be beneficial for the European Union that its budget deficits are being addressed in a realistic manner. The U.S. economy could also benefit from a similar approach. In the meantime, it might not be entirely smooth sailing. Even OPEC has warned that it has its doubts about the economic recovery and world demand for oil could dampen in 2010.

Fortunately for traders who are long crude, the price of oil has hung in there around $80 per barrel. The United States Oil Fund (NYSE: USO) and other commodity plays such as the SPDR Gold Shares ETF (NYSE: GLD) continue to be driven up the charts by a falling dollar. GLD is sitting at a new 52-week high and USO is in striking distance.

The PowerShares DB U.S. Dollar Index Bullish Fund (NYSE: UUP), an ETF designed to run in the direction of the dollar, has predictably fallen off of a cliff. UUP is down 16.3% since its March high.

The price movements of these ETFs are a clear illustration of the trading opportunities that will continue to exist for traders whether or not deficits are reigned in and the dollar recovers. It is understandable that the European Commission had grown cautious on a global economic recovery and provides all the more reason for traders to ensure that they have adequate risk controls in place. 

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