Wednesday thoughts

It's all about Europe right now. CDS for the Sovereigns in trouble this week hit all time highs and we are by no means out of the woods. Not sure if today is some sort of oversold bounce and traders pre-empting that the ECB which meet tomorrow are going to something supportive of the credit markets. Hard to see any action being more than just another short term solution as the current crisis has more to do with confidence of whether governments will be able to reign in spending enough to meaningfully reduce deficits before a bailout is required. You can bet that anymore bailouts is going to see more anger from the taxpayers of countries supplying the moolah (ie Germany) and greater demands on bondholders to take haircuts. Anyway my GOOG position got runover yesterday with a fairly nice drop but it is popping nicely today. I took the opportunity to reduce some risk by buying one of the BWB's but also I think we will hold the 550 level so I added another BWB but with the strikes one strike down. ie 570/560/540. The OEX is holding up well. The levels to watch right now are 1200 and 1170 on the ES. Bullish if we can close above 1200 and bearish if we break below.