5/3 Daily Commentary

The talking heads pretty much assume that Greece getting debt refinance will propel the market skyward again.  Either that or consumer spending will propel the market skyward.
True, Greece has 3 years to continue it's spendthrift ways.  It is a socialist state with populace heavily reliant on the dole.  It will not conform to IMF restrictions without revolt.  So, figure on 1 year's money before the IMF has to send in auditors to determine if the numbers are cooked.  Then, no money.  So, contagion is probably not an issue for the next several months.  Portugal, Spain, and Ireland don't need Greece to stay in deep trouble.  They can do that on their own.  Anybody notice the impact on the euro?  Down hard.  Next the other weak sisters will come looking for credit....
As for consumer spending,  the debt load carried by consumers compels them to stay on the frugal side for a long time. Debt payments as % of disposable personal income are 17%, very high on the historical scale. Prior to the crisis consumers assumed that refinance would supply them with the means to repay consumer debt.  Now, they face repayments out of income and it is painful.  Debt repayment will remain a priority for consumers until the burden reaches comfortable levels.  One month makes no trend.
Here is consumer credit % annual change updated through 2/10:

The consumer's still struggling to pay down debt.  However, disposable personal income is stagnant as of 3/10, well below historical growth rate:

The consumer is still trapped, but he is crawling out of the bomb shelter.  Far too early to rely on his positive contribution.  He knows he is still in a debt trap.  The "smarter" ones know they have no intention of continuing mortgage payments on underwater properties, so why not spend the money and enjoy it?

The stock market completed it's ABC correction.  The 2:00 post contained the count calling for the end to the rally.  Asian markets (and most emerging markets) will respond tonight with their celebration of the U.S. markets' rally.  This should complete their ABC upward corrections to 3-week 5-wave downtrends and set the stage for further declines. 
The 4/30 Daily Commentary gave the reasons for my lightening up in anticipation of a Monday pop.  I bought bonds right this morning to get back to 20% long TLT.  I bought 10% SDS at 29.48 and another 5% at 29.21 to get up to 30% SDS. This is my max without breaking the support at 10,980.