The Importance of Germany

The SPX has now retraced about 38% of its move from the March 2009 lows to the summer 2011 highs. If we don't hold here, a 50% retracement equates to, interestingly enough, about 1025. A 61% retracement works to 940ish.

The 'canary in the coalmine' DAX has already broken thru the 50% retracement barrier.

Why should the German market serve as the canary in the coalmine? Because Germany holds the keys to any resolution of the EU situation. Essentially, Germans must figure out whether they're willing to bail out the rest of Europe.

Given the recent century of Continental history, it appears that investors are increasingly having trouble seeing that happening.

position in SPX