The U.S. equity market wasted little time in getting off to a good start this week.  The S&P 500 surged 2.9% on Monday, with the bulk of that gain coming in the first 30 minutes of trading.

Strikingly, there wasn't a tremendous amount of volume behind Monday's broad-based rally.  Only 958 mln shares traded at the NYSE.  That is not low volume, but it certainly isn't the gangbuster volume one might have expected given the scope of the gains.

The moderate volume suggests to us that retail investors were not actively engaged in yesterday's rally and that the move itself had the semblance of being a technical rally that received added fuel from short-covering activity.

Still, considering where the S&P 500 had been headed, most investors undoubtedly appreciated yesterday's directional move.

The early indication this morning is that the S&P 500 will open higher, albeit with less verve than yesterday.  The S&P futures are currently 0.4% above fair value.

Reports indicate that there is a sense of relief that Italy managed to sell EUR7.5 bln of its bonds, which is at the upper end of the intended allocation.  The downside is that it was a costly auction, as Italy sold 3-year and 10-year paper at a euro-era record high yield of 7.89% and 7.56%, respectively. That compares to yields of 4.93% and 6.06% at the prior auction for the same instruments.

The demand at the Italian bond auction was better than the prior auction, but not altogether strong as the bid-to-cover ratio was just 1.5 for the 3-year auction and 1.3 for the 10-year auction.

In brief, the Italian bond auction is being heralded as better than feared with the caveat that it still wasn't good in the true sense of things.

The latter reality has capped some of the earlier enthusiasm seen in the futures market, which has pretty much looked at Fitch Ratings cutting its outlook on the U.S. to negative from stable while reaffirming its AAA rating as something that was expected.

Other halting influences on the futures market include a Q4 earnings warning from Tiffany & Co. (TIF), speculation S&P may soon cut its outlook on France, and word from AMR Corp. (AMR) that it is filing for Chapter 11 in a bid to improve its cost structure so that it can be more competitive in its industry.

Separately, there are reports this morning that EU finance ministers have approved the plan for leveraging the European Financial Stability Facility.  That, too, was expected.  The mystery around the leveraged EFSF continues to be who will step up with the funds to make the leveraged plan happen.

There will be a handful of economic data to digest today, starting with the Case-Shiller Home Price Index for September (Briefing.com consensus -3.0%; prior -3.8%) at 9:00 a.m. ET and followed by the Consumer Confidence report for November (Briefing.com consensus 42.5; prior 39.8) at 10:00 a.m. ET.

The Consumer Confidence report might have some market-moving sway, although the early reports of strong spending following the Thanksgiving holiday should arguably temper any disappointment stemming from a miss on the headline number.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.