Seems like most have lowered their expectations for what Big Ben will release today. Most analysts are now predicting a very dovish release continuing the same rhetoric. The push out will now continue till September so they can gather more data. The real emphasis today will be on the ECB to see if they will back up Draghi’s strong statements last week. Some expectations have also been lowered there, but hinting at more action and then giving nothing of substance other than the same continued framework could lead to a major disappointment. Some type of plan to start buying bonds in the secondary market to bring down Spanish and Italian yields must be announced to appease investors. Talk is getting louder about the September 12th date for Germany’s vote…
The macro theme continues: sluggish growth metrics as seen by overnight PMIs versus the hope of renewed policy action and stimulus.
It’s been a very specific tape as some stocks have gotten punished during this earnings season. Some brutal beatings like we saw with Coach (COH) yesterday and the continued weakness in a name like Starbucks (SBUX). Names that reported good earnings or responded well to lowered expectations have been the go to names in the last few weeks.
Today, futures are up 4-5 handles as the SPX has done a pretty good job absorbing last week’s strong move. We’ve outlined 1374-1376 as upper level support that continues to hold. Lots of shorts remain trapped so a move above 1387-1392 will ignite another round of short covering and could take markets to 1400+. Use that as the pivot resistance to trade against, especially based on closing prices. If the market sells the news look to 1363-1365 as the intermediate support.
Disclosure: Scott Redler is flat