A.M. Update

The major market event of the weekend was the Portuguese central bank's $4.9 billion dollar bailout of Banco Espirito Santo which was not suppose to happen, however after realizing that the mega-bank would not be able to raise capital in the open market (see last week's stock/bond performance), there was no other chose and the bank was split in to "good bank / Bad bank" with senior creditors coming out "A-OK" while subs got the short end of the stick as to not burden taxpayers with a bailout.

This of course is being hailed as the risk on sentiment event although in The Week Ahead on Friday we had already said,

"I suspect Monday we are likely to see something along these lines.

 If you look at where we are now, any upside move would be off a "V" bottom and these are just not common, especially in a situation like this in which market breadth is so massively oversold. At minimum I think Monday we need to test today's lows,  there's a good chance stops are run on a head fake move just below today's intraday lows, but all in all we should have at least a "W" type base which is still fairly narrow, but these deep parabolic moves often have a more narrow reversal process. From the charts I see, I think a bounce is probably likely."

For now, I don't think anything has changed and we are still likely to see something develop along these lines. 

Earnings are winding down this week with 77 S&P companies still due to report.

There's not much on the Macro economic calendar so any outside risk will likely be geo-political risk.

MY TRADING PLAN FOR THE WEEK IS THE SAME, TRY TO TAKE ADVANTAGE OF A SMALL OVERSOLD BOUNCE WITH SHORTER TERM CALL OPTIONS WHILE LETTING THE LARGER CORE SHORT POSITIONS SIT AND WAIT FOR THEIR TURN AND ADD TO A FEW AS A BOUNCE NEARS THE END.