Ahead of the open,(7-11)

Yesterday’s opening Journal paragraph started to play out overnight as Italy took over the front pages from Greece with its 10 yield shooting up to 6.65%. Importantly, as "amazingly" last week with the market not alarmed, the market was “taking this in stride” once again even with 30bps rise into dangerous (bailout) territory, while the SP rose to 1261 (+8). Part of the market seemingly being immune is the fact margin requirements were not changed (yet?), changes would likely provoke selling and we’d see 7% as margins get raised. It’s also possible it’s too early, a few days at these levels may change everything for the world’s 3rd largest debtor and market. A ‘no’ vote on some Italian budget measures Tuesday would likely cause yield surge and risk asset sale. Expecting more Pre/post vote erratic trading.

The good thing for traders is if Italian yields go down, it may give market fuel to move further.

Interestingly, Berlusconi possible exit was viewed as a positive (see below Greece), but this would likely bring on elections instead and would cause all austerity /reforms to be put on hold for a few months= more uncertainty in regards to Europe. A Greek style unity gov’t is an unlikely ‘positive’.

Do note R2K closed in the red (many times a sign of empty rally) and the reasons cited for afternoon melt up were numerous, but not one was really worthy.

Not much on single stock action off specific news/ earnings as market awaits CSCO ( 1st major end October data point report) on Wednesday.