The focus on the news flow out of Europe is beyond absurd at this point.
We went from news about a cancelled meeting to talk about a meeting to determine the terms of the next meeting and then intraday conference calls and other potential announcements. It is like watching a bunch of chimps trying to put out a fire with a can of gasoline.
The latest is that European leaders will approve a plan by no later than next Wednesday and that is giving us some bounce now. Of course, there are likely to be a dozen more news stories about why it won't happen before then, but that is enough to take us back up at the moment.
In a healthier market we can usually ignore some of this stuff because there will be good stocks that are acting independently of the headlines. That has not been the case with this market. Stocks continue to trade in a highly-correlated manner and if you are on the wrong side of the headlines you won't be saved, even if you pick good stocks.
At this point, I'm more fearful of being short than long since it is so obvious that they will continue to roll out new positive headlines anytime there is any fear that a European deal may not happen. The potential for constant squeezes on rumored positive news are much higher than aggressive selling on actual bad news.
For now, Europe is saved once again and the bulls are back on track. The only thing we have to fear is that there will eventually be actual news rather than just rumors.