Rifts, Biases, and Intrigue

Over the weekend, Der Spiegel published a story about possible interest rate caps by the ECB. These two sentences said it all:

The European Central Bank (ECB) is considering to establish in its future bond purchases interest rate levels for each country.

Thus, the ECB wants to keep not only the financial costs of ailing countries in check, but also to ensure that the general level of interest rates in the euro zone is not too much drifting apart.

In other words, yet again, bureaucrats seek to dictate market forces. If this is the gist of Draghi's grand plan, I wish him and the entire Euro Zone good luck.

It didn't take long for Germany to inflict reality.  This was this morning's wake up call: Bundesbank Steps Up ECB Bond Plan Criticism; Rift Widens

Germany’s Bundesbank stepped up its criticism of the European Central Bank’s plan to embark on potentially “unlimited” government bond purchases, widening a rift over how to tackle the sovereign debt crisis.

Very interesting use of the term rift widens.  Notice also the subtle escalation in tone by Italian Prime Minister Monti in Monti Says ‘Tragedy’ If Euro Became A Factor Of Disruption

“The euro is the pinnacle of the European construction,” he said in a speech today in Rimini, Italy. “It would be a tragedy if it became, because of the inability of us, heads of governments, a factor of disruption which revives biases of the north against south or the other way around.”

The mere mention of reviving biases is enough to say they're already revived, and the euro has already become a factor of disruption.  Soon enough, human nature will take over and all the warm feelings that brought forth the European Project will dissolve into a morass of xenophobic recrimination.

Meanwhile, the Icelandic model of telling creditors to go-to-hell seems to be spreading.  Belize is apparently running out of money and is insisting that creditors forgive 45% of what they are owed OR allow it to delay any debt payments for 15 years.

How long before this happens in Ireland, Portugal, Italy, Sprain, and of course Greece is anyone's guess. Then there is the nagging question of the Eastern European countries as well.

For now, as ever, focus is the key. My focus is the S&P 500. It had a weekly close above 1415.32, closing on its highs -- on option expiration -- and still with less volume than the May 1st swing point.

Futures have backed off 6 points since the overnight high in an impulsive fashion. Ordinarily I would be intrigued. I'm in wait and see mode now. Seeing as it would take a break of 1354.65 to get me really intrigued, I'm content to let the market do what it wants for a day or two without initiating any new positions. I just want to focus on it without being involved.

I left the week with basically a strangle position which uses higher strike call options against lower strike puts. I will let this ride without making any adjustments for a day or two, or until the market moves substantially up or down.

Here's a link to a pattern that has my interest at the moment: The Big Picture Elliott Wave Pattern

Now that's intriguing.