Futures went from -7 handles to up 10+ handles in a few minutes when ECB President Mario Draghi said policymakers will do whatever it takes to preserve the Euro. I guess Europeans can take their usual six week vacations, head to the beach, and have fun watching the Olympics. No need for budgets, discipline, or work ethic; the bills will be paid. They might as well give out credit cards to each nation, and say, pay $1-$5 bucks a month because won’t shut you down.
Anyway, it’s earnings season, and some stocks are getting the smack down and others are being rewarded depending on their reports. Therefore, I don’t see many patterns that are getting me excited to run and sink my teeth into. The indices back tested the broken trend line and failed yesterday, but I think it will have another chance today.
Micro resistance stands at 1343, but the real line in the sand to keep pressure on the bulls is 1350-1354. If the markets reclaim this area, we will see more of the same because we will be back the channel formed during summer trade. Later resistance stands $1358-1362.
Lots of very experienced guys I talk to are having a very tough time in this tape. If that’s you, take a step back and do less. It’s very easy to lose discipline, push buttons, and create a bigger hole that is not necessary. Only re-enter the market when things have more clarity and when you start to see things better.
I have advocated taking some put options if you have a bearish thesis instead of shorting indices. This prevents any unforeseen movements caused by “Stimulus News” and insures your risk is premium paid.
We can’t control the world or its policies—only our approach to our own financial health and the markets. Anger and frustration will get you only angry and frustrated.
Disclosure: Scott Redler is long SPY puts
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