If the EU Summit was a panacea, Italy's bonds would never have spiked over 7%, and nor would Spain's have reached 6.97% in the past few weeks. These bond funding events indicate the cost of capital in the Core EU is escalating. That would not be happening if the Oct 27 EU Summit had an ounce of credibility to it. Hence it is no surprise to see the SP500 trading in the 1185-1193 price band that supported the markets in the immediate aftermath of Merkle's Oct 17 comments.

Investors and traders should be aware that the short term behavioral and pattern recognition models do have price objectives below 1185-1192 this week. Additionally, now that the bull momentum from the Oct 27 high has rolled over, we are seeing the shift to bearish momentum accelerate on the intraday charts.

For the opening price direction when the pit session opens, key off 1197. The 100x4 point and figure chart shows the SP500 will likely catch a dead cat corrective bounce off 1192 if 1198 prints. This dead cat bounce would want to reach for the globex high at 1209 and attempt to close the weekly bear gap at 1214, but bear momentum on the 100x4 chart as defined by the blue moving average on the Bollinger band is sloping into 1210. The weekly bear gap is apt to be left open today.

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