"Risk Off!" Morning as Geithner Given Cold Shoulder in Poland

Market speculators had hoped late last week Mr. Geithner would ride into Europe on his magic carpet, wave his wand, and magically make all the Europeans understand that a bigger and cooler bailout of the banks is the path all should take, as it worked "wonders" in the U.S. a few years ago.  Such a simple story was a bit of a fairy tale, and from some readings of events over the weekend, Geither was given quite the cold shoulder - and that might be stating it mildly.  Some European leaders really didn't seem to like this 'butting in' at all.

Whatever the case, as those who have followed the markets for years know - the 'free market capitalists' in our markets love "hands off" on the way up, and "intervention by government/central bank" on the way down.  Hence the lack of immediate intervention is causing booing and hissing. 

Despite a 6% rally last week it remains an unhealthy environment dominated by headlines and innuendo.  1-2% gap up or downs almost every day are not a sign of clarity but headline chasing.  While it feels better on the way up, then down, it's the same action both ways.

That call for a rejection at S&P 1218 at the 50 day moving average resistance is looking prescient today, but as I stated last week I would not be majorly exposed either way over the weekend due to headline risk.  Trying to guess political outcomes has little to do with investing, and much more to do with outright gambling.  The next big event I suppose is the fed announcement Wednesday but according to CNBC, 70% of those surveyed now expect Operation Twist, so Bernanke's plan to use the media to leak his intentions has worked.  I don't know if there is going to be a major effect on markets, unless the size of "OT" is bigger than anticipated (currently the expectation is $400B).  The market has already done much of the work by driving down long term (10) rates in expectations of OT.