While our markets were closed on Thursday, there was bad news out of Dubai.  Credit default swaps, the cost of insuring against a debt default by Dubai, leapt by a quarter, or 100 basis points.  This caused a nice gap down on Friday, but it was a holiday session.  These jitters then spread to the European countries.  Here is an excerpt from the WSJ

Dubai’s troubles resonate far beyond the desert fantasyland that its borrowing created, fueling concerns that financially stretched nations like Greece and Hungary may struggle to pay off debts.

Investors and analysts say they’re worried about the health of Greece’s heavily indebted economy and banks, which could suffer as the European Central Bank moves to pull away some of its financial-support measures. These measures have included ultra-cheap bank funding.

The gap between the yield on a Greek government bond and relatively-safe German debt — a key gauge of market fear — jumped to a peak of 2.2% Friday, before falling slightly. When the pan-European Stoxx 600 index fell 3.3% on Thursday, Greece’s market fell twice that amount, over 6%.

This news coupled with the fact that the stock market has fewer and fewer leading stocks has me feeling very cautious.

Please recall that IBD is calling the ‘market uptrend under pressure.’  Here are some of their latest thoughts.

Indexes gapped down at the open. The Nasdaq and NYSE composite slid below their 50-day moving averages, but rebounded to close above them.

The market bounced soon after the opening-bell plunge.

Volume was light as trading ended three hours early. But at Friday’s close, volume was tracking higher compared with the same time Wednesday. That suggested that if the session had gone to its normal length, volume would have ended higher.

In short, the abbreviated session probably spared the market from another distribution day.

Right now, the futures are pointing to a slight gap up of about 53 points.  The Asian markets look to be running (~+2%) as well.  I want to see the market’s reaction on Monday.  I would be very wary of any sizable gap up at the open, as it might be quickly sold.