Credit may have been the ugliest today

 High Yield Corporate started selling off in the morning and while the market was lateral, HYG continued to sell off the entire day.

It looks like the robots tried to get an end of day momentum rally going, it failed miserably and took the SPY to the worst levels of the day on volume right in to the close. As a matter of fact, the SPY in the last few minutes took out all intraday lows and closed  below intraday support/lows as well as only  $.06 off the very low of the day in the last minute on some of the heaviest 1 min volume of the week!

ES is still open, but saw the same right in to 4 pm, very ugly indeed. As I mentioned before, bullish indications (once you have entered a real bear market) in a bear market often fail, statistically price patterns are no better then a coin toss, whereas they perform 50% better in a bull market. The opposite can be said of bearish patterns in a bear market, they are much more likely to be effective. I look at this market and all I can think of (as it was tough staying short through October) is the 30/60 min charts which, next to the daily harts, are the most important and just how bad they look; probably the worst I can remember seeing. So I'm sticking with the trend.

From last Friday's S&P close, the S&P has lost more then 6%. We also broke through some October gap support today and the next level of important support is at $114, once that is taken out, there isn't much from sending the market to test the October lows or put another way, the lows of the year, that's where we are for some perspective.

The WOWS Model portfolio just made history and entered the top 10 at number 9 of 8113 portfolios and a weekly gain of an amazing 51.44%, the monthly rank also hit a new high at #22 out of 18,730 portfolios and an 85.72% gain (gotta love those leveraged ETFs). The best thing is, I haven't made a trade in the portfolio since mid-October, just stuck with the longer term 3C charts and my trust in them.

I'll have more for you as I have time, I have to start cooking and I hope everyone in the US has a fantastic Thanksgiving.

Seasonal Tidbit

Just browsing for any potential news while the risk/credit template loads and saw this,

The week on Thanksgiving over the last 10 years has averages -.02%, or nearly flat. This week the S&P is down -3.8%, making this week worse then the same week in 2008.

Just in case you were wondering where we stand as I have often mentioned, Fear is a stronger emotion then greed, thus markets fall much faster then they rise, have a look at the October rally retracement.

The rally top to bottom has retraced nearly 62% with the majority happening in the last 6 days, and nearly the total retacement happened over 7 days whereas it took 18 (what seemed like 18 very long days) days to rally.

I think the question of the triangle top that caused so much controversy in technical circles has been put to bed and just in case you don't recall were WOWS came down on the issue (usually I'd say false upside breakout), it was simply too obvious of a pattern and everyone thought, "Head Fake", so once again the market did what it does best.

ES Update

And here comes the volatility...

3C/ES shows roughly the same negative divergences as the SPY did, no accumulation on that move up on volume and interestingly ES has some ugly downside price movement which is even contradicting the Euro as you can see in the very bottom window, the correlation went negative meaning that even as the Euro was rising during that short period, ES was seeing some nasty downward movement.

USO Update

As I suspected earlier, the DOE draw on crude announced earlier this morning, seems to have been a non-event as the practicality of restocking is pretty obvious, Crude looks to be headed lower, so why restock now?

 This is the Euro in red vs USO, FX arbitrage isn't giving USO any opportunities to the upside.

 The 1 min chart saw the early knee jerk reaction on the draw, which is you remember was accumulated before the report was released in what appears to have been an obvious leak of the report ahead of time. It seems that intraday knee jerk rally was promptly distributed.

There's the early positive divergence before the report came out, distribution of the intrady rally and a slight positive now. I would like to add to oil shorts in the gap above which seems to be the new target, lower then the previous. Gaps are normally filled and with tension in the Mideast, this may be filled, for now I default to yesterday's idea of having some exposure, maybe adding in that gap so long as 3C is negative looking and maybe adding the rest on a break of today's lows. I don't want to add too much with a long weekend and the potential for a lot of news out of the Mideast/Syria. I'd rather take that risk when the market is open next week rather then the few trading hours we have left this week with 4 days or so of possible Mideast news.

Interesting Burst of Volume

At first I thought, ok, here comes the closing rumor to lift the market in to the close, I don't see much support for it though in underlying action. Maybe the robots tried to get a momentum chasing rally started?

 SPY volume and price spikes a bit

 Even on the shortest term chart, there's no accumulation and in fact some distribution thus far.

Watch the Diplomats...

OK, problems in Syria, we know that. The Arab League is considering a no fly zone, France pulled their ambassador and when that happened last week I said, watch for other countries to quietly pull their diplomats as well as this would be an indication that military action is about to be undertaken.

Well guess what, CBS news reported the following in the last hour or so:

U.S. urges Americans to leave Syria "immediately"

Furthermore:

The U.S. Embassy in Damascus urged its citizens in Syria to depart "immediately," and Turkey's foreign ministry urged Turkish pilgrims to opt for flights to return home from Saudi Arabia to avoid traveling through Syria.

The warning followed an announcement in Washington this week that Ambassador Robert Ford would not return to Syria this month as planned, indicating concerns over his safety.

Here it is...

The Obama administration quietly pulled Ford out of Syria last month, citing credible personal threats against him.

The warning came two days after Syrian soldiers opened fire on at least two buses carrying Turkish citizens, witnesses and officials said, apparent retaliation for Turkey's criticism of Assad. The Turks were returning from Saudi Arabia after performing the annual Muslim pilgrimage to Mecca in Saudi Arabia.


Here's the kicker from Stratfor (Strategic Forecasting):

Focus on the CVN-77, George Bush Aircraft Carrier, it has moved from its traditional parking spot, the Straits of Hormuz which is a strategic position the US maintains and has moved right in to striking distance (or thereabouts) of Syria. 


What makes this a VERY volatile situation is that the Chinese and Russians absolutely are against ANY intervention in Syria and are so serious about it that the Russians have moved warships in to Syrian waters.


Russia has a naval base in Syria at the port of Tartus.


Perhaps even more serious (I'm not sure if you get too much more serious then having a US Aircraft Carrier Battle Group and Russian warships in close proximity), but Iran has said explicitly that any attack on Syria would be grounds for Iranian retaliation.


If there is 1 thing the market hates, it is uncertainty and going into a long holiday weekend, it is not likely to take this news well. That is why there is the old Wall Street saying, "When the missiles fly it is time to buy", it is not because Wall Street wants or loves war (but that is up for debate), it is because the start of war removes the uncertainty before it.


I would say the timing of the CBS release and the market's failure to break resistance are NOT coincidental.

Market Update

Oh my, did the SPY just blow it?

Two very simple charts

 Volume is picking up as the SPY was unable to break resistance.

3C shows the failure pretty clearly.

Trade Alert JEF Short

I have been talking about this one possibly being the next MF Global, it just gave a lower risk/Higher probability short trade entry and it's confirmed. Egan-Jones, the only rating agency that has any (fill in the adjective) is not backing down from a potential credit cut in JEF.

JEF rallied to EXACT resistance.

 3C 15 min negative divergence.

 3C 5 min negative divergence and leading

And 2 min negative.

I would not swing for the fences and forget risk management, this is dangerous like a dying and cornered wild animal, but it is a trade I would certainly take here with a possible stop a few percent north of the resistance area, NOT AT RESISTANCE, above it.

I want your opinion

We have a bunch of smart traders here and a bunch of people who naturally think out of the box or as you have seen with your own eyes, the market is much different then you probably thought before you joined the Wolf pack and you likely have a new, out of the box perspective.

You all know what I have been reporting, Germany is up to something and that something looks like 1 of 2 things and in fact there may be a plan "A" and a back up.

First plan "A" seems to be to kick out the countries that are causing core contagion, we have seen France on the radar as they have caught the bug and most notably today, we saw a German auction FAIL! If the country with the best of everything in the EU can not sell its debt, we know what the market is thinking, "Any backstop Germany may provide or has in the past committed to provide is now an outright liability to Germany" and the banks don't want to be caught flat footed again like they were when buying Spanish, Italian and French debt, just to see it fall in value putting the very banks at risk of credit downgrades as well as outright failure (examples include ERSTE, Dexia, recently Commerzbank in Germany, and many more). Look at what buying these bonds did to MF Global and look at what Jefferies is going through now, which I maintain is likely a bank that will not exist in present form if at all come Q1 2012 and maybe before.

These banks that hold massive Italian (mostly) and Spanish debt are backing away from Germany and France as they realize they are trapped with the Italian and Spanish debt. They are trying to offload it, but Italian banks hold so much they have decided to roll the dice and hold it because they know if they try to sell it on the secondary market, the value will plunge, yields will sky rocket and they (whether their math is correct or not) figure they would take a bigger loss in trying to sell it then just hold it and HOPE for a miracle. Any investor/trader knows when you are reduced to HOPE rather then an edge, you are likely on the path to destruction.

So banks a) are not buying the strongest debt in Europe, Germany's because Germany is seen as the ultimate back stop. Secondly they most likely don't have the capital to buy anything and as mentioned, don't want to be in the Italian finger trap. Interestingly, after several months of massive selling in US treasuries as European banks sell everything they can to raise capital/money, the last 2 US treasury auctions have been a rather smashing success, which tells us that foreign banks and wealth funds see the US as the safest place to park money right now (which may end up being a big mistake considering our canaries in the coal mine-MFG, JEF, and the Congressional Super Committee's predictable failure to do what they were supposed to do-it's Wednesday, deadline has past, they have admitted defeat).

So what is Germany planning? The ultimate Bazooka that the market's are begging for is, "Let the ECB print', let the ECB lend to the IMF and let the IMF buy up all the debt, Germany, because of their experience with hyper inflation in the Weimar Republic is loathe to do so and if they were to do so, I think they would already have moved in that direction. We know from Wikileaks and US embassy cables that Germany has a plan to exit the Euro. We also know from many sources that Germany wants to consolidate the Euro area to far fewer countries and any that remain will ultimately give up their sovereignty in a bid to look more like the US and Germany/Brussels will be the overlord. This is a bad situation as it leaves a lot of countries hanging out to dry and default.

So we have this today from the second half of "Mer-Kozy", Sarkozy says today, exactly what the German CDU party has been voting for:

• SARKOZY SAYS EURO ZONE MUST FURTHER INTEGRATE (This means fewer EU nations, not more)
• SARKOZY SAYS TROUBLED EURO COUNTRIES DIDN'T UNDERTAKE REFORMS (Translation: It's your own fault, don't cry when you are left hanging out to dry) and even more interestingly, France has been one of the countries (thus the divide between Germany and France recently that has seen some very barbed comments from both sides) that has been screaming for the ECB to PRINT. Now they seem to be abandoning that position-something big is happening between Germany and France on the issue or France is making overtures to Germany as they see their AAa rating in more danger everyday-today was Dexia. The importance of this should not escape you, think hard about this one, it's much bigger then a bullet point headline.
• SARKOZY SAYS EURO ZONE MEMBERSHIP IMPLIES OBLIGATIONS (Taken with the comment above, he's saying the same thing, you had your chance, you blew it, you will be out). Again, a 180 degree turn from PRINT!
• SARKOZY SAYS EUROPE'S FUTURE REQUIRES CONVERGENCE (Here is is simply moving toward the German position).

So, here's what we should be thinking about, what is the end game. The ECB is buying debt for the time, but they lowered the quota for how much they can buy. The ECB has been vocal about not monetizing debt like the US and that is Germany's position. So if they are buying debt which they know is toxic and will cost them eventually, why are they doing it? It seems they are trying to buy time, trying to keep Spain and Italy from imploding which will drag down all the potential members of the new EU.

This is important. If Germany walks and they may just do that after seeing they can't sell their own debt without their yields spiking too, it means a whole lot of recessionary trouble as country after country defaults. If they are moving toward a new , smaller EU, the same result will happen, except maybe some of the core nations will be spared. It's bad or worse.

The timing of Sarkozy's 180 degree about face, coming on the heels of Germany's major wake up call today in a failed bund auction may be Sarkozy trying to get in the good graces of Germany that holds the future of the EU.

Think about what is happening here, it is important and whatever you come up with, I'd love to hear it.

Some Traditional Analysis and Gut Feeling

This is a 2 purpose post, maybe 3, 1) to show you the difference between the forest and the trees 2) maybe it helps you in some traditional analysis and 3) I actually want the market to bounce, I want a good tactical entry as the forest is very negative, but a short term bullish move would be much appreciated in setting up new shorts or adding to existing ones.

Even when you are 100% right about the market, the market will try to make you doubt yourself, I think that is one of the reasons that statistically, we see as many or more up days in a bear market then down days, however the down days are much more severe.

 Here is the S&P-500 on a daily chart with standard Bollinger Bands, when an index as big as the S&P-500 "Walks the bands" as you can see at the red arrows as the S&P tracks along the lower band, this is exceptionally bearish for the market.

 On an hourly BB hart, note that the market bounces between the lower band and the median and sometimes to the upper band. We have a gap in yellow and a bounce to the upper band would fill that gap and allow for good short trade positioning, just know if it happens, this is the "Trees", not the "Forest".

 The short term 10 min BB's are pinching which indicates a directional move is coming, with my Demark inspired indicators firing a long signal (on a 10-min chart),  would guess the break will be to the upside.

 Here's an intrday base-like pattern with resistance nearly broken, it may be broken by the time I post this. The implied price pattern target is between $118.30-$118.50, that's in the yellow gap zone, but not a complete fill. Volume is picking up to the right as it should for a base breakout, again, this is nothing that concerns me or my short positioning, but an opportunity for some members to get positions at a better/safer level.

 The hourly crossover chart has as it should, seen a few retracements to the yellow 10-bar average at the white arrows, usually the 2nd/3rd retracement is deeper and hits the blue 22 bar moving average, which would put the market in the gap and possibly fill it, however, even if that happens, all the sell signals (this screen uses 3 signals for a short/long trade) remain intact, again, separating the forest from the trees.

 My proprietary Trend Channel has held the entire move down on a 60 min chart, a bounce to the top of the channel would not change the trend, but it would nearly fill the gap and offer a SCSO (Second Chance Shorting Opportunity).

The daily Trend Channel really defines the trend and the market would have a pretty big boune to break that which I do not see happening. This Trend Channel on a daily chart does an incredible job of defining trends and keeping you in the trade when your emotions say otherwise.

So that's my take or at least "Gut feeling".

ES/S&P E Mini Update

Some of you may not be familiar with the S&P E-mini futures contracts because for 1, they are futures trading, not equities and for 2, they are exceptionally expensive (roughly multiply the S&P price by 50x and you have the price of 1 single contract), thus this is where the big money often plays.

While most of us don't trade them, they are a valuable data point, especially 3C which has performed nearly flawlessly on the ES 1 min chart, which has much more relevance then a SPY/S&P-500 1 min chart, I would say it's along the lines of a normal 15 min chart, but a bit more short term in the moves predicted.

Here's today's ES update

 Over night and very early in the a.m. (EDT time zone) there were two negative divergences, the first to the left sending ES lower, the second about an hour before the New York open and that negative divergence seen right as the chart changes shades from extended market hours to New York market hours, there is another negative divergence, this one sends ES off the opening highs to the low of the day, at which point we can se accumulation at the white arrow and a move or intraday bounce as I reported earlier as being likely from the SPY/QQQ/DIA intraday charts. That move is now, in ES, running in to the next negative divergence. This is around the time of the European close and things often get whacky in the late afternoon, but it looks like ES as of now, is set to start moving lower, which has a direct relationship to the broad equity/stock market.

I'll be updating equities next as well as a few others.

USO Follow Up

StockFinder 9:30-10:30 data is still down, apparently I was the first one to report it, which tells me there aren't many traders active today and they usually scream bloody murder the second the data feed is corrupt.

In any case, here's the argument for the longer term or at least swing trade (short) in USO, via long SCO is my first choice for the leverage.

 Here's a 15 min chart of USO (green) vs the commodity complex which is being effected long term by a strengthening dollar/weakening Euro and as I have suggested and today Chinese PMI data confirmed, a lack of demand for commodities from the biggest importer of commodities due to an industrial/manufacturing slow down, to be more precise, down right contraction. You see how looking in dark corners can give you great insights, like the example of commodity action and a slow down in China? This is why we look where others don't, "To make money in the market you must see what others have missed".
As USO was on a rampage up for no apparent reason other then what I said was probably the biggest head fake in USO I can remember, you can clearly see the confirmation at the green arrow between oil and broad commodities and then the divergence, which also marked the top in USO, currently USO has a lot more downside to catch up to commodities, so at professional trading desks, this is seen as an arbitrage trade opportunity and will likely drag USO lower, and faster then commodities move on a daily basis.

 Here's a shorter term chart of the same, the USO top while commodities had already started trending down (yellow arrows). Still a lot of USO downside.

 Intraday we have a bullish ascending wedge and I mentioned 3C showed the possibility of USO pushing further gains intraday, there may be a negative divergence that allows another short entry in USO if you missed yesterday's of the top, which many of you hit to the day on the negative divergence-you all make me proud! :) So we're looking for a possible head fake breakout, which as of right now, has already started (this chart is 10 minutes or so older then the current action).

 USO is fighting the FX correlation so that's another probability on our side so long as the Euro remains under downside pressure.

 The 10 min chart featured earlier marked the exact top with distribution as well as accumulation at the exact bottom, there's no confirmation of the uptrend which broke today.

 The longer, more important 15 min chart shows the same, which makes a good argument for riding out short term volatility and staying short USO and using any upside volatility to sell short in to. Remember that Friday on 11/11 when I wasn't feeling well, the market was up pretty god and I said, "I would use this strength to sell short in to"? Well it turns out many of you did and since then the market has lost -7.5%, if you used the directional trades I have been advocating lately (leveraged) like SPXU, then you made +26% in 8 days thus far. I know it is hard to short into strength, but ultimately, as long as 3C confirms like it did that Friday, it is much, much less risky then you think. We have to fight through fear if we want to make money. Heck, you think I haven't been scared through October being short the Model Portfolio and feeling a responsibility to all of my members (I would much rather lose my money then make a bad call for members), well it's paying off and that's why I remind you to watch the forest, not the trees. The WOWS Model Portfolio (which is going up against MT and Wharton Students) is now at #11 rank for the week out of 7850 portfolios weekly-nearly the top 10, with a weekly return of 47%, the monthly is ranked #26 of almost 19,000 portfolios with a return of 79%, that's following conviction, not letting emotions rule and looking at the forest, not the trees.

 Here's my daily USO Trend Channel, we now have a gap from today, that may be the new target.

On my custom crossover screen (hourly), we have a sell short signal, the white area is the gap that may be filled and that is likely going to be our next add to spot.

USO Update

This is more of a partial update as I have a 60 min blackout in the feed from earlier, at least on my main 3C template.

So once again, the MOST leaked report I think we have ever seen was leaked again.

Inventories came in as follows:

Released on 11/23/2011 10:30:00 AM For wk11/18, 2011

Prior Actual Crude oil inventories (weekly change) -1.1 M barrels -6.2 M barrels Gasoline (weekly change) 1.0 M barrels 4.5 M barrels Distillates (weekly change) -2.1 M barrels -0.8 M barrels

I'm not sure what consensus was, but there was a draw on crude of 6.2 mm barrels and it's not unexpected as restocking at these prices just doesn't make sense, thus this is probably the reason 3C showed a VERY weak bounce in USO yesterday, they knew since USO was reversing, there would be a draw as the oil can be replace at lower prices in a few weeks.

I know at least a few of you followed one of my suggestions from yesterday re: USO,


"I don't think it is too early to start phasing in to a short position, via whatever vehicle you choose (short USO, buy SCO/DTO), my choice would be to buy SCO. However,  would phase in to the trade, decide what you risk management will allow for as far as position sizing and I would maybe enter 25% of that today, if we get a little more upside add another 25% (50% of the total) and then on a confirmation of the break lower add the remaining 50%."


Here are the TC 3C charts I have for now until SF reloads the data shortly.

 The original USO bounce target, pretty close, but a very weak bounce.


 Here's the  1 min chart, accumulation can be seen right in to the release of the report, this is VERY short term 1 min accumulation for an intraday bounce, we'll watch it for a move down, right now it still suggests there could be more upside, there's a "BUT" in there that I will get to.

The 10 min chart has tracked the top as well as the bounce perfectly and it even showed the weakness I spoke of yesterday and that being the reason I thought yesterday WAS NOT too early to start shorting USO if you haven't already.


If you did, then today you made over 4% for 1.5 hours of trade.


I'll update again as soon as the data loads or as soon as I see something on 3C TC system.


The "BUT" is this, USO is in a bearish position, the inventories were mildly bullish for USO short term , but if I can figure out that restocking will not happen at these prices, then institutions are way ahead of that so the report of a draw on supplies is nothing more then a short term event, in which case,  stay short USO via being long SCO/DTO. 


I really can't believe how often this report is leaked, the SEC sure is on top of the market and regulations about insider info.

Market Update 2 - 3C

 Remember yesterday's later day weakness that I said was so strange? Here you see it in the DIA, well we are in line with 3C confirming the weakness in the market thus far.

 The Q's showed an extraordinary move from short term strength to losing all of it yesterday, you can see on this 1 min hart. There's a VERY small positive divergence that may create a counter trend intraday bump, at this point it's not much more.

 Here's a little longer QQQ chart showing the effect I mentioned above, unbelievable.

The SPY weakened significantly yesterday as well, as  a matter of fact, I could make no bullish bounce case yesterday outside of a candlestick formation, 3C wasn't showing it. Again a very small positive divergence now, maybe a countertrend bounce.

Market Update 1-Risk Basket

The 3C template is loading now so here's the RISK Basket Indicators.

 Any bounce hopes commodities may have been contemplating the last few days as they dislocated higher against the S&P, were firmly dashed with the Chinese PMI, on a Relative-Rate of Change basis, the Commodity basket fell harder this morning then the S&P as they are now back in sync.

 While MF Global liquidations have put pressure on commods recently, you can see a pattern on commodity weakness that has been a lot longer lasting then the MF Global situation, before the summer, they were in line with the market.

 The market and Euro are trading in lockstep for the most part, it's obvious where today's and all recent weakness has come from, about 6,000 miles east of my location.

 Yesterday High Yield Credit was one of the only risk assets to really move and it moved down vs. the market-CREDT LEADS EQUITIES.

 Here the market usually catches up with rates, the S&P still has a lot of downside room to catch up.

Also I noted weakness yesterday in financials, the market is now starting to see the pendulum effect, the market swings too high and now it will likely lead in discounting and swing much lower then the median.

I won't be an "I told you so" because my job is to just that as best as I can. I keep coming back to an article maybe 3 weekends ago or so about how you know when things start slipping down the slope to the point of no return and enter a bear market. For about a month or so I've been saying, "This feels like the bear in 2008" because I traded full time for a living through that market.

Guess what? Here we are again. The difference is the first time we started from a stronger position (such as employment, housing values, etc) and this time from a much weaker one, that's why yesterday's 20% downward revision in advance Q3 GDP was not a good sign.

Furthermore, yesterday we get news after market of the Fed's plans for new US bank stress tests using some late 2008 criteria. They'll be testing 6 of the largest banks, the TBTF's and they are conducting this test now for VERY obvious reasons, I truly don't remember the last US stress test. Remember before the last FOMC meeting I said, "The Fed isn't changing any policy until they figure out where the money is most needed".

Things didn't get any better overnight and into the EU open.

The Belgium bank Dexia, that was collapsing until a French, Belgium, Luxembourg led bailout calmed market fears, was raised as an issue by the EU commission who now believes each countries' respective share of the bailout may not be feasible given the deterioration in the market, once again raising fears Dexia blows up. The Commission won't say much more, so the market will not react well to that uncertainty.

The Dexia debacle is firmly tied to French downgrade probabilities due to their exposure.

As I have been showing, commodities have been underperforming for months and it hints that something is wrong in China, well Chinese PMI released last night confirms it. PMI dropped from 51 to 48 as well as a 32 month low! As a reminder, readings in PMI below 50 signal contraction, so the commodity weakness was certainly tied to China and chances of a hard landing go up significantly.

Now for the news that I think we all knew was coming...

Germany auctions off $6 billion in 10 year bunds, they sell only $3.644 billion and this from the strongest country in Europe!

Reuters quotes sum it up best:

"It is a complete and utter disaster," said Marc Ostwald, strategist at Monument Securities in London.

"This does not bode well, it is the worst of uncovered auctions that we've had this year and little wonder that the Bund sold off on the back of it."

German Bund futures, the euro and European stocks fell after the announcement of the auction results.

The next thing to come will be an all out attack on the German yields, then... Game Over.


This is what happens as the world enters recession, everything above, but there's more.


As if the above was not proof positive that the core has now piked up the contagion bug, that every EU plan was supposed to halt and failed, now we have this from Fitch Rating's Agency:

• FITCH: FRANCE CAN'T ABSORB MORE SHOCKS WITHOUT UNDERMINING AAA
• FITCH: FRENCH AAA WOULD BE AT RISK IF CRISIS INTENSIFIES
• FITCH: ADDED MEASURES LIKELY NEEDED FOR FRANCE '13 DEFICIT GOAL
• FITCH PROJECTS FRANCE DEFICIT IN '13 ABOUT 4% OF GDP

"Similar to the situation of other major ‘AAA’ sovereigns, the increase in government debt has largely exhausted the fiscal space to absorb further adverse shocks without undermining their ’AAA’ status. The principal concern with respect to France is that the intensification of the eurozone crisis will generate contingent liabilities that will be crystallised onto the sovereign balance sheet."

On the Fringe, the ECB/Merkel warn Greece that the next tranche of aid will not be sent to Greece until they back up their promises in writing, something I told you that the new G-Pap refuses to do.

So, that is just what has happened overnight. Six months ago this would have been 6 months worth of news. This is why I tell you that we are either near or at the point of no return.

This is why 3C has looked so bad since mid October, you didn't think all this selling would just happen in a week?

And this is why I have not hanged anything in the model portfolio and remain completely short.