Our Energy models are warning that the European markets are getting overdone. We have to pay very close attention to Europe for the share markets may not advance and this could send even more capital fleeing to the USA.

Everyone has been buying the bunds and the Dax inside Europe assuming that when the Euro cracks they will get Dmarks. But Merkel is not ready to dump the Euro. In fact, it may be over her dead body. She believes that Germany needs the Euro to export to the rest of Europe. The fact that her austerity is killing Europe she does not see as the issue. So there is no way to make her blink. The only way to do that will be to sell Germany and buy the dollar assets. Caution is the word. We may see a different pattern unfold entirely.

During the last Sovereign Debt Crisis, Europe all peaked in advance of the USA. We are likely to see the same outcome initially this time.