This morning we are seeing the "headline risk" that I spoke about in yesterday's closing column. S&P futures were up about 5 points when I first checked at around 5:45 AM and have suddenly dropped to down 10. There are more scary headlines out of Hungary as it now appears they also lied about their deficit and there are rumors of a large derivatives loss at SocGen.
Most probably these dips could be bought but the system is fragile and there is the small chance that this becomes an all out contagion. Therefore I would suggest keeping trades small. On their own the economy and markets would be breaking down but with government intervention things are holding up. That is not a healthy environment where one could have a lot of conviction.