Into the trading week, (Nov7- )

US vs. EURO'world

Although SP gave up >2% on the week on rapidly changing European headlines, bias/direction remains to the upside for risk markets. Market is seemingly taking Euro risks in stride last week(fatigued) on lack of concrete announcements/progress from last weeks summit, life goes on seems to be prevailing as it has since this all began 2 years ago (esp. relating to Greece/EFSF leveraging). A fresh and likely biggest wary to look at is Italian bonds/yields. ECB is intervening holding it below critical 6.5%, if it gets above it may trigger margin increase changes and the consequences (financial stresses) are inevitable and are unknown. After filtering all the Euro noise out this is likely most critical. Still, amazingly market is not so alarmed by Italian yields at these high levels giving credence to calmness/taking this in stride as well, which allows for any positive developments on this front to rally market.

Despite October rally, risk is underweight as most remain bearish. Performance chasing in risk is a good possibility into year-end, if European downside risk is reduced or at least the perception that it is for the time being. Improved US economic data and earnings is also offsetting Sovereign debt crisis noise as US double dip/recession fears have receded, while larger European economies confirmed a slide into recession last week (as expected this Q). (again)Italian 10yr’s must be kept in check for the offset to continue.

SP technical look for (limited) upside with a decisive break over 1275, Italian yields below <6% would likely calm fears and allow such a move. On downside, SP 1220-1230 and afterwards 1193 is the level to watch for support.

Earnings related stocks from last week:

N, SBUX, HANS, IACI, CVLT (cloud names N,FFIV, DTLK etc. acting well since EPS’), SIMO, MELI, FIO (caution: thin volume and competition coming make it volatile), EL, MDRX, CLH. *Some of these names are at double top levels.