Looks like yesterday was nothing more than the market being BP'd. Fool you once than shame on you, fool me twice than shame on me. Well I guess shame on me. Thought there was more to yesterday's sell off than simply BP.
The Euro is screaming higher. I am not really that surprised and have mentioned the possibility a couple of times. If Trichet actually had something to legitimately work with I would have great admiration for what he is doing and be buying Euros like crazy. He is doing everything you want if you were the owner of the currency. The problem is the underlying structure of the Euro is not sustainable and so I don't think in the end Trichet will have a chance. I will probably write more on that someday but the in the short term the risk is the Euro has a very sizable rally starting now or in a few weeks. What this means for U.S. equities in not clear as the correlation has been close to one. At some point that correlation will break down but I wouldn't want to bet when that will happen.
Anyway 1070 to 1080 is what to be watched. Think the odds of breaking 1040 have dropped to close to zero. Now we will see what kind of strength we have to see if we go all the way back to 1100. Chopping and grinding chopping and grinding. A least for today we are staying in our range.