Market is now in PANIC MODE - EXTREME CAUTION NEEDED

Dear Friends,


The market has during the day moved to what can only be described as on the edge on total melt-down - for now liquidity is ok, but sovereign spreads like Italy vs Germany is blowing out indicating the market not ready to accept the 1 trillion non-plan.


A couple of major points for now:


RESPECT THIS IS FOR REAL. We have tracking model which monitor doom-and-gloom this model is up 9.2% on the day - not on the month but day. 


This is at least a 5 std. dev. move indicating extreme caution needed.

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The key point to look at remains: solvency or lack of it. Today the spread between the Italy (the supposed insolvent) and Germany (the supposed solvent) moved close to pre-package level indicating the market wants more than word - it needs details and action.

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The technical levels to observe:

If market closes below 1100-00 there is fair chance of going to medium-term support @ 1050.00 (another 2.5-3.0%).........

But the main risk remains that we have moved directly from a perceive V-shaped recovery to Crisis 2.0 - a crisis which will lead us much, much lower.

Winston