Ahead of the open, (29-11)

Despite most of the IMF, pact speculation being denied, US markets still managed to squeeze pretty hard most of the day and only closed 5 pts off the SP highs. Volume suggests most were still on vacation or just not believing the move to get off the sidelines.  If the longs only come out and play, SP low 1200 should fall, otherwise this move will eventually be faded and this will be just another countertrend rally.

Higher beta stocks and luxury group were jumped as in every oversized rally. The interesting aspect and negative was the move in Treasuries. Banks also faltered before closing well, suggesting it wasn’t all risk-on. If this rally ahead of summits continues, financials need to confirm.

A bond auction in Italy will be in focus in Europe (Italian 10 yield still above 7%). It will be viewed positively, if the amount sold is in the top range. < 8bln target. EU Finance ministers likely will provide further details on leveraging the EFSF, but this shouldn’t be all that noteworthy.

In all, need to see low SP1200’s decisively broken to get on the Eurozone ‘hope’ bandwagon.