Suddenly A Very Good Morning

The standout news for me this morning is that Spain's IBEX is up over 1%.  The Euro is holding at 1.30.  Even the CAC is up after the ouster of Sarkozy.  Germany had stronger than expected factory orders (but is down still on the day).  All this seems to have helped the ES futures overnight.

I know Doug Kass has reached his highest net long exposure of the year at this point.   He may be quite encouraged this morning that we aren't down 20 points.  We'll likely get a gap lower and a bounce up to a 38% level.  Then it will remain to be seen what the market chooses to do.  After a strong down move, retracements back to a 38% level are usually an automatic sell.  If the trade does not work, something else may be afoot.  The afternoon may be the best trade for me today after such a good weekend.

First I want to see if 1357.38 goes on the cash S&P index.  If it doesn't a large triangle may be setting up.  Somehow I doubt this though.  It may be time for the market begin to confound dip buyers, just like it did the other day.

Crude oil has broken 96.67 which was the February 2nd low, and effectively rules out an impulse pattern higher from current levels.  I had been playing a potential thrust to 120+ using a small position in the UCO that now will have to be closed.  Oil is oversold here, but this trade is effectively over for me.  Oil is now exposed to 75 over the next few months.