I'm encouraged to see the futures up strongly this morning, having traced out a gorgeously impulsive rip to the upside starting at around 6:30pm ET last evening (as Spain was cut to 1 notch above junk by S&P). The 1430 level is where the market should have turned from, in technical analysis terms, and turn it did. Now it seems we'll see a gap up in the S&P cash at the opening bell.
The first target is the 38% retracement of the decline from 1470.96. This number is 1446, and also coincides with a backtest of a down-sloping trend line drawn from the 1474.51 high.
Price may trace out a three-wave a-b-c up to the 1455-1460 area and then retest the 1430 level. Or it's off to the races, back to the 1474.51 high and beyond. I'm betting on the former. Here's why:
The pattern at yesterday's low looks unfinished. And rarely does the market complete and reverse a strong multi-day decline with an overnight gap. Of course I can be wrong on both counts, but this is how I feel right now. And believe me, it would be better for me if I was wrong.
More silly news from the IMF.
IMF calls for action as euro zone crisis festers
Ms Christine Lagarde, the head of the International Monetary Fund, said she expected "courageous and cooperative action" as she laid blame on Europe and the US for fostering a sense of unease that has led companies to delay investment and hiring.
Sorry Ms. Lagarde, the sense of unease has come from a failed project that was intended to be the stepping-stone for world government. Instead, once given the chance to borrow at the same rates as their more fiscally healthy neighbors, poorer countries went on a debt binge so massive that Europe can't bail itself out and needs help from the IMF, which is funded primarily by US taxpayers.
Meanwhile, as only a person playing with Other People's Money could say, Lagarde told the FT, regarding Greece: "It's sometimes better to have a bit more time."
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