Whipsaw Wednesday – No 1,565 For You!

That was my comment to Members in early morning chat today as the markets began turning sour in Europe as Cyprus continues to be a worry but, more importantly, Spanish and Italian 10-year notes are pushing back to 5% as the fantasy of EU support runs into the harsh reality of abandonment in Cyprus.  This was no surprise to us as we had already labeled the run-up as fake, Fake, FAKE and have been tilting more bearish since last week.  

We had some quick fun in the Futures this morning, riding the Nikkei and Oil down for quick profits but I already (7:29), warned people not to be greedy as we're just looking for that Egg McMuffin money in the morning and oil already hit $350 per contract and the Nikkei was good for $250 per contract – which is never bad for an hour's work, is it?  

Why not stay bearish?  Because we figure we're still good for a big prop job into tomorrow's close and we have 4 Fed doves putting up a wall of Fed-speak between 11 am and 1pm (Evans, Rsengren, Pianalto and Kocherlakota) ahead of the 5-year note auction so it's not very likely they'll say any words other than encouraging ones for the bulls.  If the S&P Futures (/ES) fail to hold 1,550, however – it will be "game on" again with our Futures shorts.    

Obviously, I'm no perma-bear – just last week I said we could ignore Cyprus because it wasn't big enough to interrupt the planned prop job for the end of quarter and I pointed out that the average Global Citizen does not give a crap if a bunch of rich people lose 40% on their deposits over $130,000.  Now we've seen that that's true but what next? 

Now we have a bit of a trough until earnings season kicks in around April 8th (AA) but we're already starting to see from some early reporters that expectations may have been set…