While Europe leaders play "Extend and Pretend", and Washington plays political "Chicken" the equity markets, based upon our indicators, remain remarkably sanguine.

Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.

Last week the markets once again turned their focus to Europe as Moody's downgraded Portugal's sovereign debt to junk status, along with a sell-off in Italian bonds and bank stocks.

Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.

Last week's oversized bounce was probably due to two factors, the parliamentary vote in Greece forestalling a near term default event and the end of QE2 with the resulting bubble in the Treasury market that began deflating.

Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.

The coordinated action of the US and the International Energy Agency to sell 60 million barrels light crude oil from the strategic petroleum reserves has most likely put an end to "Oil's Endless Bid" as explained by Dan Dicker in his recent book.

Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.

With the exception of a few odd takeovers, last week's financial news was all about the theater going on in Europe and assessing the probability of a Greek debt default.

Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.

Last week the major equity indexes looked oversold and the chances looked good for a short-term rally. Surprisingly the only rally attempt came last Thursday and it was feeble at best.

Trade selection using volatility as the primary criteria. Different trades for different volatility opportunities.