PreMarks 10.27.11 {Europe Edition}

Markets set to open sharply higher on news out of Europe on a series of policies to help avert their debt crisis.  So far this is what has crossed the wires that I've seen.

-Greek debt holders to take a voluntary 50% haircut on Greek debt.

-New European stabilization fund {EFSF-don't ask me what all the letters mean!} will be leveraged about 5 times which gives it a lending capacity over 1.5 trillion Euros.  This is probably enough to not only deal with Greece, Italy, Spain and maybe Ireland and Portugal.

-Over 100 Billion Euro recapitalization of European banks.

Whether this is a real solution or a band-aid markets are euphoric this morning.  Set to jump anywhere from 2-3% on the open.    When you look at the better than expected GDP numbers coming out of the US {GDP grew about 2.5% in the previous quarter} then here's a few things we can say for now.

-Recession talk is off the table for the time being.

-European collapse is off the table for the time being.

-Corporate earnings have come in for the most part better than expected so far for the 3rd Quarter.

All three of these ought to backstop the market between now and the end of the year.  Couple that with market seasonality market seasonality gives us a greater probability of higher stock prices between now and December 31st. 

This is likely a trend changer meaning that the market will be back in "risk on" mode and a "buy the dips" mentality is likely to prevail between now and year's end.