The bulls will be facing some hurdles today. The market remains overbought, which makes further upside difficult but not impossible. The most important stock in the world, Apple, disappointed. European sovereign spreads continue to blow out and the ECB continues to twiddle their thumbs.
On the positive side it is very likely that a deal will be reached soon regarding the EFSF. The EU is on the edge of the abyss, but I do not believe they will throw themselves in . German politicians are talking tough because Germans are against the bailouts and this is a negotiation but in the end I believe they will do what is necessary to prevent a cataclysmic event. Market participants remain underinvested as we head into the seasonally strongest part of the year. Additionally, option expiration often serves to prolong a rally and might provide a positive surprise for the bulls this week.