Draghi's Big Word Rally

When pressed on what tools are still available to the Fed since interest rates are so close to zero, Bernanke has, on numerous occasions, admitted that "communications" are one of his last remaining tools.  Evidently, ECB president Mario Draghi has come to this realization, too.

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he said earlier today.

That wasn't the best part.  This was:

"And believe me, it will be enough," Draghi said, according to Reuters.

This reminds me of the comments early on in the Greek crisis when their finance minister said that whoever bet against Greece in the bond markets would "lose their shirts."

Trust Me.  Believe Me.  I Swear.  These rarely turn out well.

Meanwhile Germany won't approve or deny the ESM until September, and they have already said that Spanish bonds are not eligible for EFSF purchases.   So until the only country in Europe with any money starts signing checks, Draghi's ECB will only be offering words.

Nonetheless, the markets offered definitive direction in the overnight session: STRAIGHT UP.  This means that most of the upper targets mentioned here over the past few days are now on the table.

Beyond the 1353.25 swing point (which should be exceeded at the open -- beware if it isn't), there is the gap at 1362.66 and of course the 1380.39 high, which I still think could possibly be exceeded.

There are still warning signs, however.  One that kept me from being too aggressive yesterday was the fact that HYG broke below its July 12th lows, thus confirming IYG (financials) which had already done the same.  JNK looks close behind as of last night's close, but things will likely change based on the overnight action.

The point is that HYG (high yield credit) has been a leading indicator versus SPY and it has paid me to heed its signals.