May retail sales out - import prices up 0.9%, more than expected.

Retail sales up 1.4% with an upward revision.

Treasuries spiked to 5.314% on the news, now falling back just a bit to 5.301%.

Stock futures didn't like it. At all. The levels before the release indicating a higher open have all but evaporated.

Don't buy "The consumer is ok", which is what you're going to hear. The CPI and PPI data will be the big movers.

Now Ridde me this Batman - how does the consumer spend with no MEWs and credit cards running into the wall? Or are they yet hitting the wall?

Within 30 minutes, the treasury flipped and is now flat. The futures liked that - a lot - and now equity futures are heading up significantly; looks like, barring some major event in the next few minutes, we will start somewhat higher. But don't fool yourself - The Bond isn't moving lower - it looks to have bottomed. More importantly, it is now threatening the upward channel it has been trading in - to the upside! 5.3 today is a nasty number - if we break it that's a channel violation - look out!

The key question of course is "what's ahead from here?" This is not a trivial question to answer. I see two scenarios in front of us - and here's how you can tell what's up.

Scenario #1: We're done with "The Bull" and The Bears are out in force. Goldilocks was not just assaulted under the table recently, she was mauled and half-eaten, and The Bears prettied up the corpse and propped it in the window for us to see. How do you know if this is the scenario? Two things: 1) The S&P breaks decisively below the 50, and the Russell 2000 breaks the neckline on the Head-And-Shoulders pattern that it has formed. Look at the Russell on a 60 minute chart over the last 3-4 weeks - there is a clear H&S. A decisive break below the 820 level confirms. The S&P confirms with a break below the 50, currently around 1493. There is also support right around 1489 and 1481; for all intents and purposes these levels are one. In other words if we see a 1%ish move down from here on the S&P and the Russell confirms, we're done. Short at will.

Scenario #2: "The Bull" has one more burst of breath in it. We will break out upward and those who shorted here will be screaming - and losing their ass. They will capitulate, having made the call early. But - this pattern is bearish in the intermediate term - within the next couple of weeks. This scenario will be signalled by a decisive break above 1510 on the S&P. Markers pointing to this are the Chinese mainland market which appears to be headed for a massive double top (following which a 40-50% collapse - almost straight down - looks likely!) and the market's refusal to decisively break the 50 on the S&P - three attempts in the last week, and no convincing violation. This says that while The Bull is gasping, he's not quite dead yet. Goldilocks was assaulted under the table, but she's still alive - for now. The Bears, however, are heating up the pit and intend to stuff her in and cover her over - but until its good and hot its "too early."

In short, watch what the market tells you, not what you want it to tell you. While shorting here is not likely to hurt you badly, in that I don't expect the S&P to break the 1530 level even if it runs from here in Scenario #2, if you get scared out you're gonna take losses - twice!

Have a profitable day!