If you want to get a good feel for what's happening behind the scenes just take a look at this article that appeared in the Wall Street Journal over the weekend. Take special note of the predicament the banks have found themselves in with all these deals they were putting together. In the rush to get business they relaxed the rules to the point where they don't have the outs they would normally have to protect themselves and getting these deals to go through is a huge deal in and of itself. If they can't get the deals to pass, they will have to carry the inventory themselves and either site on it for a long time or sell it at reduced prices and eat the losses. It wasn't but five weeks ago that these deals were still being announced left and right like hotcakes. How quickly things can turn.

To be fair though, it's not just a one-way street to lower prices. We see U.S. Steel making a bid for Canada's Stelco this morning at a 40+% premium and ABB selling it's services division to CBI. There's others as well as widely known Gateway is bought by Acer.  Though slowed and more susceptible to the realities of the greater fool theory no longer working it's magic, there are still companies looking to do deals that they believe adds value either immediately through synergies, economies of scale or strategic industry positioning.

Overnight we saw a very strong China market once more with the rest of Asia following suite and this morning Europe is up as well. U.S. futures are indicating a bit of a pull back after Friday's romp on pathetic volume. The dollar is mixed, bonds flat and oil up slightly and metals mxied. Softs were mixed overnight.

As I flipped through a few charts yesterday once more in preparation for the week, the vast majority of the charts I examined have the same look and feel; dead cat type bounces into resistance. Yes, there are some good charts but they are far and few between by comparison. The vast majority are short setups, not buys.

So we are in the twilight zone here once more where it's extremely hard to put much money to work. I know in my own portfolio I have reduced markedly into these rising prices holding only about 30% in equities with that invested short the indexes and long precious metals. It's a time where we have to continue to tread carefully as the textbook urges us to consider the rationality of a rise on no volume. Yes, we have seen in the past that it can continue longer than makes sense but we also know it can turn on a dime.