Nice rally overnight on the Chinese exports news. The Euro has also begun to rally and the range in the 10s is breaking with a strong offer starting to develop. The carry trade interest is tepid though signaling that once again another giant overnight rally may be a bit overdone. Institutional activity yesterday was pretty interesting. They were selling as hard as I have seen in a long time but unsuccessful at holding the market down. Big block trade volume was more than twice typical but ended up basically flat in terms of deltas. The locals ran the show yesterday and captured the best profits from the rotations. Score one for the little guys. This said though I’m betting a good deal of this rally is short covering from institutions trapped short and the overnight volume is consistent with that. The question is when is it over and I have a feeling lots of stops are just north of the 71 handle. Then again it could be over now and we could see a quick gap closure again and maybe even a final more legit test of the ever important 52 again. If sentiment settles in to the long side on the cash open though I do think the OH is fragile and we will quickly test the critical 70-71. That level is really tough though and I expect a whole lot of volatility around it. It may be too tough to see the right entry for a turn through the noise and we will consider sitting it out and fading the R2 or 79 instead of we trade up today. Regardless of whether we retrace off the open though we do think that overall bullish sentiment will prevail and 52 will hold as interim support – unless we get new news to the contrary of course. Whatever happens we do expect good rotational activity today and other than spikes around the key levels we also expect volatility to continue to come off.