This morning, the S&P 500 Index e-mini futures (ES Z1) are trading higher by 7.25 points to 1264.75 per contract. Once again, the markets are reacting positive to the news out of the European Union. The new rumor is that the Italian Prime Minister Silvio Berlusconi will resign if he does not receive a confidence vote. This stuff is really getting ridiculous at this point and it is still surprising to even see that the markets are moving on this news. Traders that are just sick and tired of hearing about this European nonsense should simply follow the U.S. Dollar Index. When the U.S. Dollar Index declines the major stock indexes will rally and inflate higher. The opposite is true when the U.S. Dollar Index rallies, the major stock indexes in the United States and Europe will decline and deflate lower.
Corporate earnings season is winding down. The focus of the markets is now purely on the European bank bailout. Traders should focus on the leading bank stocks for clues about where this market might be heading. J.P. Morgan Chase & Co (NYSE:JPM) is the most important stock to follow in the United States. Deutsche Bank AG (NYSE:DB), UBS AG (NYSE:UBS), and Credit Suisse Group (NYSE:CS) are the most important European banks that traders should follow.