Short and sweet this morning. Not much going on economically other than the Empire State showing a decent number. It missed a bit but is still a big improvement over the last number which is what the market is really looking for. Institutional volume is confirming that the market is looking for reasons to flatten out or rally as opposed to putting in more selling. Institutions just haven’t participated in the bulk of the selling on Friday or overnight for the most part as confirmed by very low volume. There are lots of little levels today – maybe too many so we will need to pick our spots carefully. The Euro is putting in a bid as I write but treasuries continue to rally. However I reallly don’t see a conflict in that. Retail investors are treating treasuries like stocks now and that is where the price action is coming from. It isn’t for flight to quality with yield enhancement that is for sure. It is just evidence that all the participants fall into tow camps. Either they have no idea what to do or they don’t want to make a major move until someone else does. I will say that there are a lot of leftover short positions in equities from Wednesday last week. Nothing has warranted reversing those or taking them off at this point but I do think those trades are fragile and if we see a pop we will see some dumping of shorts pretty quickly. But then if we end up on the wrong side of the mid 60s things could get pretty ugly.
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