The Bigger Surprise

There is arguably a bank run going on in Europe and the Euro is barely down .5% while the CAC, DAX, FTSE, and IBEX are up over 1% across the board.  Perhaps a big surprise is coming.

Meanwhile gold, crude, and the Aussie dollar are down.  Perhaps a bigger surprise is coming.  That surprise being that whatever bazooka they deliver in Europe has the unintended effect of spooking the markets.  Someday soon, this will indeed be the case.  Until then, the market hopes.

Zero Hedge reports that trading losses at J.P Morgan may be up to $7 billion now.  Notice how it's getting worse by the day?  I continue to feel there is more damage than we are being told, and that it is happening at more banks than just Jamie's Place.

None of this matters until it does, because the market seems to have higher numbers in mind.  1321 is the old nemesis on the S&P cash -- the 23.6% Fibonacci retracement from May 1st.  There are higher levels too, but only above 1340 would I start having my doubts that the market was doing something other than bouncing.

Two things of note from yesterday's action: the number of NYSE advancers was very strong, while total NYSE volume was very weak vs. the decline.  Should volume begin to confirm advancers coinciding with a strong up day, I'd be concerned.  Otherwise, this is what I'd expect to see from a deep oversold condition: it's short covering.

I continue to keep an eye on the 200-day and 50-week MAs at roughly 1278 and 1282 respectively.