Good Morning traders,
Sorry to have missed several installments of these morning thoughts, but I was having some fairly severe computer issues in the office.

• We are coming in this morning to find world equity markets marked higher.  Asia is flat/up (Japan leading at 0.8%).  Europe up strongly around 1.2 and Middle Eastern markets have taken a break from their selloff and are flat to slightly down.
• Aussie dollar (AUDUSD, AUDCHF, AUDJPY) is strongly higher while the US Dollar is down in a fairly large move.
• Copper is trading a new (roll adjusted) 52 week high in overnight markets, while the precious metals complex is flat/up.
• Petroleum products are off in what appear to be significant moves (WTI nearly -1%), but, in context of the recent volatility in the complex, these are not that significant.
• Grains are flat and mixed in early trading.
• There are two important themes to consider in recent market action.  The first, obviously, is that Crude has been dramatically in play due to the Egypt situation.  Overnight, some concerns about supply disruption through the Suez have been alleviated, but the entire petroleum complex remains vulnerable to headline and event risk.
• (Note that Gold has not responded to stress in the world markets as might have been expected.  This may be further evidence that Gold is functioning as a risky asset rather than in its traditional role as a safe haven.)
• Oil stocks have certainly been a source of strength in the stock market.  Major indexes ex oil were actually down reasonably strongly in yesterday’s trading.  Definitely keep an eye on these tdaoy.
• Though we never know with certainty, it is a little more difficult than usual to understand what is going on in the broad market.  In my morning Waverly Report, we currently hold a short position in the S&P 500 due to the bull trap and failure test at recent highs.  The question, of course, is how to read the subsequent strength.  Is this a consolidation before a further drop, or is it remarkable resilience presaging a drive to new highs?  Time will tell, but swing traders holding either long or short positions (it certainly is possible to make a cogent case for either side) must be responsive to market movements and quick to admit they are wrong.  For now, my personal sense is that the short side is slightly more justifiable, but only with firm stops in place above the recent highs.
• Today, realize that this market is in consolidation so expect crosscurrents.  This is the beginning of the second day of consolidation, so do not fade a strong trend move that breaks yesterday’s pattern (say, on 30 minute chart), as this move could well have continuation.  Remember also that the market could respond strongly to any news out of the Egypt, and that your setups cannot really anticipate the impact of this news.  Pay close attention to all your positions today.  Continue to watch Oil stocks, though they may be less in play today if the day plays out according to early themes (Oil weakness).  Best opportunities will probably continue to be in stocks that recently reported earnings–for most traders, much of your attention should be focused in this direction.