October starts on a negative note

Hello All,   October opened on a negative note as Greece said it likely will not meet its deficit reduction target for 2011.  The S&P will probably test the 1072 low basis Dec. over the next 12-24 hours, which will determine whether the subsequent fibonacci retracement levels will be realized before years end.  We have energy prices at their lowest levels in over a year, and all eyes are on Brent trading just above $100.  A psychological break of $100 will continue to price slower growth into the markets, and that may coincide with a break of 1.30 on the Euro.  Trading below 1.32 today, the Euro is at a 8 1/2 month low where I have decided to take profits and have a gut feeling that the trade is extended for the time being.  As bonds rally 3 handles on the day and Gold up about $40, we wonder if investors will continue to de-risk or actually step in and buy when things look the most bleak.  With markets sliding a lot quicker than they can glide, I would like to be hopeful that we can get a major turn in these markets the 3rd or 4th week of October, which would present enough time for a significant Santa Clause rally on the heels of corporate earnings.  With the US Dollar rallying, it is naturally helping Europe with its debt issues.  Just as we bailed ourselves out and devalued the heck out of our dollar, it is now Europe's turn to follow in our footsteps.  We have an ECB rate decision on Thursday, where many had anticipated a rate cut, but without the fear of inflation this may already be priced in; hence, no rate cut.  Europe simply needs to acknowledge how bad its sovereign debt issues are, either restructure or default, and establish a similar type of TARP program to pave the way towards solvency.   Arman Vahdatinia President, Chief Market Strategist 1-877-338-EXPO [3976] ext. 25 www.ExpoFutures.com *There is a substantial risk of loss trading futures and options.  Past performance is not necessarily indicative of future results.