Welcome back to the wolf pack.  This morning's big gap up (which as I type this is almost evaporating) is being embraced by long-only managers in Europe.  Let that be a flashing warning signal to us…always, always fade long-only managers in Europe (and in the U.S. for that matter),

Futures overnight bumped up at the 1297 level, which translated into the S&P 500 itself is a smidge over the 1300 mark.  We probably have room up to 1310 to really frustrate the shorts and lure in some more perma bears, but at the latest up there the air should be getting too thin for a while.  We will look for a retracement down to 1260-1280 or so for support, where they should either round the troops again up to 1340 or falter alltogether.  We shall see, one step at a time.

Let us also remind ourselves at this stage that capital preservation should be the number one goal as we nestle into our armchairs each morning.

To the charts we go:

The S&P 500 is trading 15 days in a row without a real meaningful pullback.  Just sayin'…but that sort of action sniffs of short-covering and underinvested perma bulls chasing their own tail.  The inverse head & shoulders pattern remains in place with its ultimate upside target around 1340-1360…if it works out that way.

For reference and because turmoil in Europe has taken a leading position in today's global markets…here is a daily chart of the German Dax.  Note the important immediate-term horizontal resistance line and the 200 day moving average within jumping distance.  The 200 sma on the Dax historically served up some good support/resistance.

We remain comfortable with our portfolio, please watch the morning video.

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