We're slowing down

I don't have to say again what happened in the last 2 days.

Earnings announced thus far have outperformed very well, sending stocks and higher yielding currencies higher against the dollar and yen. If you were long in this market, good for you.

Today, there had been a wet blanket thrown into the mix - the CIT group's impending bankruptcy filing. Talks with government officials broke down, apparently because the company could not find a way to restructure and save itself going forward.

I'd say its politics. Afterall, they let Lehman, GM, Chrysler go, what's more a relatively small company like CIT.

A lender to many small and medium sized businesses, CIT's bankruptcy represents the wider tough credit picture the US economy is facing - which puts a drag on the recovery process.

This is a different problem from that which the bulge bracket investment banks face. The small and medium sized business are the largest group of employers in the US. If these businesses could not get credit, more people will get laid off.

The market mysteriously lost its euphoria. During the asian trade, the Dow traded negative.

Also because I believe the market's 3% surge during last night's trade was also to price in JP Morgan's better than expected Q2 earnings announced just today. True enough, when JPM's news was out, its stock actually fell on profit taking.

From here there are plenty of choppiness to be expected as some big firms have yet to announce earnings.

I'd advise against going too long from here.