Ahead of the open, (21-12)

So, was today’s market melt up of 35 SP handles because today’s news was ~2X better than yesterday’s 15 handle loss?. Hardly, today the market was a victim of no sellers vs. no buyers early on (opposite of what we've seen the last few trading days) and the speculation the market may reverse yesterday's losses came to fruition and more. If you add the illiquidity factor, you always have a chance for a seasonality melt up!. The gradual build up in ES pts. premarket (only 1205 at 7am) and open internals indicated the market would not be prone to day #4 of an early morning market sell- off. The rally was larger in points and very broad based with Financials, Tech (networking led with big gains as speculated in trade idea for morning, (NWX), APKT, JNPR >8% and more linked stocks to AT&T), Industrials, Materials, Energy all 2-3% higher early. Oil rose ~$3 early and Gold was up ~20, the risk- on commodity bounce suggested late last week took off.

As far as the news helping sentiment was hardly fresh news, unless majority of what is left of market players has been asleep at the wheel recently or not understanding ECB's LTRO announcement 2 weeks ago.(more below)

• Spain successful notes auction was cited, bond yields have been falling for days to 5% levels and it was the ‘second consecutive successful weekly’ auction. This shouldn’t be a surprise given last week’s and recent liquidity push. This directly relates to ECB’s 36mth LTRO program demand results on Wednesday, which is getting attention (finally) for being an unprecedented and generous liquidity move.QE, game changer like to some.  Yes, the same ECB liquidity push alluded to here at least 3 times (below) recently as something the market has been overlooking following Draghi’s ‘cold water’ pour recently. Two weeks late,r it's all the melt up rage and the boost to get over 50MA.

(In all, there is enough liquidity provided by ECB that should contain yields from re- widening to recent alarming levels for the last 3 weeks of ’11 trading”…” It’s not from pure Eurozone fear/panic ......(sov’bond yields ok, ECB measure from Thurs a help as noted). "...."A bazooka result to keep calmness in peripheral Euro bonds may not be needed with all that has been done recently. The ECB liquidity measures were overlooked last week, they will be a big help here.")

Once the results are in, watch sov’ yields to see if they keep going down to gauge LTRO’s success rate, not how high demand was (expectations grew today to ~500bln), which is buoying markets today. (Banks borrow from ECBfor up to 36mth at ~1% and buy sov’ bonds then pledge that paper to ECB (Arbtrade/carry trade for banks) is the program hope. The debate will be how much of the amount will be used to purchase sov' bonds/carry positions vs. banks use with funding problems.

Also in Europe, Germany’s IFO was acknowledged as an ingredient to the rally, but folks, Germany’s PMI came in 2pts higher last week to 51+ signalling this number today. As far as U.S, we’ve been getting solid data for weeks, is a solid housing start report all that surprising news?.  Also, it was bracketed here (another RRR coming) in response to China news yesterday, today this same angle was picked up as ‘easing’ positive for the markets.

In all, a perfect gift for longs to sell and/or to believe in Santa "ECB' Claus for a little longer....Unfortunately, this last positive (LTRO) is out of the way now and euphoria should subside. Focus will turn to (ie). SP AAA resolution will now come with more risk due to higher market prices.(1250 resistance). A rare miss from ORCL will be defended, but will have an impact as some factors mentioned by management will definitely effect other co'.