If you recall my Fibonacci analysis yesterday, I had expected to see a bounce to 1512.00 to 1515.00 before the decline resumes. The ES futures have stalled this morning precisely at the 38.2% retrace, which is the equivalent of 1511.66 in the cash market.

This morning is a “no news” morning as domestic events go. However, European news doesn’t look good, as Bankia posted the largest loss in Spanish Corporate history. In addition, Spain’s budget deficit grew from 8.9% to 10.2% despite the so-called austerity program.

On another note, the Euro slid overnight as the first LTRO-2 repayment was less than half the expected amount. The question is, do the European banks need much more liquidity than already given? Are things really that bad in Europe???

I don’t know how deeply events in Europe will affect our market, but it appears that we may see a pop-n-drop as there is so much interconnectedness between our country and Europe. You may even call it entanglements.

Regards,

Tony

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