The European meeting over the weekend raised some concerns, causing overnight selling that continued throughout the day. The free fall action did not have excessive volume. We should have seen minus tick that would have reached a minus 1300 entry point but did not. This means that the block selling is not as intensive with these concerns. Do not forget that this market has had propensity to shrug off other European concerns on a day-to-day basis. We should have seen the bonds have a greater rally with the equity losses. The bonds are not rallying to even last week’s highs with the S&P futures making lower lows. Therefore the bonds are telegraphing their weakness and heaviness in this environment. Keep in mind that this is expiration week, which creates volatility. The fed generally does not like to have egg on their face, which the market action did provide. The bonds are up on a pinnacle with little substantiation to support these levels. We will see where a good potential shorting possibility may present itself. We did not see the severity in selling pressure on Wednesday. Perhaps the intensity is starting to wane. Do not forget this is expiration week so some sort of rally should materialize by week’s end. The bonds are once again exhibiting an overbought condition that only develops by manipulation. They are not trading normally as we saw a stronger than expected mid-week bond auction on the 30 year. This environment is showing that extensive overbought situations do appear, but they also present a bubble environment. The key to evaluating markets on a daily basis is the environment. An unstable environment creates volatility and wide swings that are more unpredictable. That is the environment we are currently experiencing but that always is a precursor to stability being introduced. Do not forget that an oversold condition can become more oversold. However, it is like a rubber band. The snap back of a very stretched rubber band has more speed and distance. We watched the bonds absorb the many news items Thursday morning. We had Jobless Claims, Producer Price Index and Empire State Mfg Survey at 8:30 am EST. Treasury International Capital was at 9:00 am EST, Industrial Production was at 9:15 am EST and The Philadelphia Fed Survey s was at 10:00 am EST. It was quite an excessive amount! The bonds did exhibit a more normal trading pattern. The 145 price area was a resistance from a prior rally of weeks ago. Prices repelled and it appears that the bullish energy is lessening. The market showed some major disparities, which can be attributed to the expiration Friday shenanigans. The early morning saw a strong rally carrying above 1220 gradually slide away, resulting in more than a 15-point erosion. Lately rallies haven’t had traction. I have a theory that there is a pool of money readily available to drive the stocks upward starting next week. The pool will be sufficient to carry the S&P at least 50 points higher with perhaps a goal of 100 points. This may take more than the 5 trading days next week. Although I predict we see the dynamics materialize in the early part of next week.