Judging by the flatline SP futures overnight >1090, the last thing on anyone’s mind was the possibility of chaos that ensued immediately after the opening bell.    It’s almost inexplicable to understand that in a wired world where trading is literally 24hrs a day,  you’d have no insight from the futures as to what’s ahead for the day, especially signals to a 3% down day.   Today’s was one of those days as seemingly all were caught off guard as no downward gap was in play.   Instead a straight trajectory down of >30SPX points, ~3% losses all around.   You’d only have to tune in on CNBC from 9:30am to tonight to see the sweat as all talk was about the damage being done to all indexes, gold etc by the “PIIGS”

It was spooky in the markets, to us, the spookiness was to see our bolded warning come to fruition immediately and to hear comparisons of Lehman /BSC prevail all day long.   So, now in less than a few hours, we are knee deep in the PIIGS mud pit, everything changes as this story takes center stage with every trader/investor.   You know what? ..we’ll use “Club Med”  instead of PIIGS, being bacon loving Canadians, eh.

Considering so many were caught off guard and so many more coming home tonight to these headlines, we would have to expect more selling ahead as this story is not a bad eco’ report or a bad ‘big name’ earnings report, this is completely different to an investors sensitive psyche’.   Basically, its time to sit back and wait to see how this unwinds.   Unless, a magic wand is used,  we have no intentions to re-position long with all the technical damage done.   Even, if this is backstopped by EU in short time from becoming a long standing problem hitting all over the place, we still have to accept we are closer to a 10% correction than anything else.   In our view,  let’s get this over with (10% correction), capitulation occuring, pessimism hitting fresh highs and hope this problem is backstopped at around the same time.   This will present excellent opportunities, many better than March to October’ 09, especially if US earnings, recovery begin to matter.  

Without looking, we probably broke down back below from the trendline going back to highs of October 07 when we got odour of a crisis.  Coincidence or not?.   Anyway, until the tide cleans up the beach’s at “Club Med” ..Greece, Port’ Spain,  call this a short vacation time.