There is both good and bad news to report. The bad news is that Rydex traders yet again increased their net long exposure yesterday and their bullishness is approaching an extreme. This would be more concerning if other indicators were at extremes, but they are not. Additionally, Italian government bond spreads continue to blow out as PM Berlusconi is unable to secure reforms.
The good news is that the Greek's bluff was called and it now appears that they are falling into place. The remaining hurdle is getting Italy to reform, which I believe they eventually will. We are now roughly half way through this correction in terms of time. If we can get another decline early next week, we will be set up to rally again.