Europe Provides a Triple Resolution to the Debt Crisis

After a 10-hour marathon session, Euro leaders agree to a three-pronged solution for Greece's debt woes and a plan to handle potential contagion. The EFSF lending capacity is to be raised to 1 trillion euro's from 440 billion euro's. Banks and insurers agree to a 50% loss, or haircut, on their Greek government bonds. Bank recapitalization plans are provided as well, not too large as to hurt the banks, but not too small to disappoint.

The devil will be in the details. How will the EFSF be leveraged up? How will the 50% Greece haircut take place? What are the details behind the bank recapitalizations? For now, traders are simply celebrating the news.

The futures sky rocket in the overnight session on the news. The S&P is up over 20 handles, Dow Industrials over 200 handles and the Nasdaq over 40 handles. The VIX should drop as discussed in the nightcap last night so the market bulls will have fun today, at least in the early going. Watch VIX 29.90, UTIL 432, SOX 367.75, RTH 106.75 and XLF 12.75 as described last night. Perhaps the news will be sold so today and tomorrow's trading is important. Watch to see if the starting year number of SPX 1257.64 is attacked this morning, and, how price closes today in relation to this number. Caution should be maintained moving forward.