A firm tone led by short squeeze in European indices. Credit finally outperforming equities in Europe and U.S. Seeing decent size short covering to start after the weakish close yesterday. [BAC] CDS 2-3 better post earnings, [C] missed estimates, not seeing flows just yet. Spanish auction a non-event, but CDS tighter in peripherals. New issue remains very robust and heavily oversubscribed. [IG] and [HY] moving inline as decompression hangs around 5. This morning's economic data, jobless claims, housing starts as well as decent earnings reports set the stage for an upside breakout. Oh yeah, the January expiration probably had something to do with the mechanical, relentless underlying support throughout most of the day.Today’s observations: 10:00CT chatter of a bullish option trade, SPY 1500 calls expiring next week on 1-25-13 paper buyer(s) of 100k. Follow-up later in the day as the S&P 500 notched new 5-year highs. Some players seem to be anticipating additional gains in the Spiders next week. A block of 100,000 SPY Weekly (1/25) 150 calls were bought today for an average of 16.5 cents per contract. Nearly 200,000 now traded, making it today's most active options contract. Separately, 20,000 of the 49 strike (weekly 1/25 $49 calls) were bought for 43 cents. 81,660 now traded, making it today's fifth most active contract.Bank of Japan talking about buying assets open-endedly until 2% inflation is foreseen.The World Bank warned of pending currency wars as nation after nation seeks an export advantage. They were careful to point out that this is not likely to occur much before 2014.Look here >> @princetontrader aka Mike V & his vol levels rock!Pivots: http://t.co/Yea0DKj0 Webcast: http://t.co/Eg5cCAk Mike also posted his vol levels at (08:52:01) ES 1467 X 1477 and NQ 2749.75 X 2728.25. Match up to your charts.Charts posted by Kathy Garber @tbg4321: *ES testing bearish Bfly PRZ 1475.5, extended tgt is 1480.75. SPY http://screencast.com/t/u1uQpiwwV ES http://screencast.com/t/5A5wWMyx DX harmonics http://structuraltrading.com/wp-content/uploads/2013/01/1172013DX15m.pngNote: Kathy teaches how to trade harmonics.She'll be doing an introduction to harmonics webinar with MrTopStep on Saturday, 1-19 (sign up here). In a nutshell, emerging patterns give targets to the completion point, completion pts or PRZ (potential reversal zones) are places to scale or tighten position, understanding price action offers the reversal trade at the PRZ. When volume profile levels correlate with harmonic levels, it strengthens the significance of that level.Brian Shepard is a 20-year exchange member of the CME Group.