The European See-Saw

The market has been up recently on hopes that EU officials are getting their act together to move in a cohesive way and tackle the sovereign debt issues. Now we are getting some news blurbs that officials are having difficulty holding discussions on the EFSF and that there will be no decision on leveraging the fund this weekend.

The disappointment out of Europe seems to be trumping the positive economic reports from this morning like the big improvement in the Philly Fed Index to 8.7 from -17.5 last month. That's a big improvement, and will embolden calls that we are not going to experience a recession. I still think the odds are 50/50.

In earnings news, a few disappointing reactions in the likes of AXP, EBAY, and WYNN. On the positive side, see RVBD and PM.

The dollar is roughly flat today, but most commodities are lower. Oil prices have pulled back to $85.60, and gold prices are lower near $1617. Copper prices are plunging today as well.

The 10-year yield is hovering near 2.14%, and has been steadier in recent days than it has been in weeks. As for the VIX, it continues to climb and is now +6% higher back to 36.43. It is just above its 50-day overhead resistance, so this is an interesting juncture to watch.

Trading comment: The SPX is still holding above the 1200 level, which is short-term support (1190-1200). Bulls are hoping that we can continue to build a base around these levels before a successful push through SPX 1230. A break of SPX 1190 would likely spell another trip to lower levels of the recent trading range. Tough to gauge, as the market is very news driven by each headline out of Europe. We are staying defensive and maintaining our etf hedges.

long SH, PM