The Swissy Signals QE

Bloomberg reports that Germany has moved one step closer to expanding the EFSF (the European rescue fund), which essentially means that Germany has moved one step closer to QE (quantitative easing).

The euro has barely budged, but the Swiss franc is notably stronger. USDCHF was down 2.25% at 9:14 am EST.

I've been very wrong about the Swiss franc. My thesis was that it would weaken considerably as the EU problems spread wide enough to cast a shadow over Eastern Europe. Clearly neither has occurred yet. I still think it will. But for now, I see the Swiss franc making another leg lower -- below .70. That is a huge move, I know.

S&P futures got to 1218.75 yesterday and tanked to 1201.25. They're right back to, and above, yesterday's high. Is this window dressing? Very likely. Is it pre-holiday seasonality? Very likely. Is it a new bull market? Not so likely.

The move from Friday's low has been impressive, but taken in context with the price action since the 8/9 lows, it still qualifies as a bounce. Its structure, internals, and volume still show weakness.

And for me, that's the best scenario. Any move in the market that displays weakness beneath impressive price action gets my attention. It has a high probability of giving back the entire move.

Nothing is 100%. But the odds are getting higher each day.

Today, I will watch the A/D line and the TICK index. Ticks were strong yesterday, while the A/D line showed marked negative divergence. There is a confluence zone of two different Fibonacci projections and a 1:1 measured move targeting the 1226-1229 area. The ideal set up would be to see a test of this area with notable TICK divergence and continued divergence in A/Ds.