Mario Drahgi's announcement that the ECB would leave rates unchanged did not go over so well for S&P futures. A sharp decline ensued. What this means for today's action is a little ambiguous. While yesterday closed just above the resistance cited here (1874-1878), the rally looked sloppy. Could 1859.79 get retested? Yes. Could the market continue to rally to a Fib target just above 1900? Yes. Does any of this have to happen today? No.
What does the ECB's benchmark rate have to do with the S&P? Simple. It's another Easy Money barometer. And the barometer says that the ECB may not be raining liquidity as fast as the Street wants.
Also, it appears that more and more smart money types are figuring out that, yes, Europe is dangerously close to outright credit deflation, and Draghi is dragging his heels on embarking on QE. After all, at just .25%, how much can he cut?
QE is not the answer, though. Only a painful debt deleveraging will cure the patient. And as more and more people figure this out, we edge closer to the precipice. Until then, new all-time highs remain a very real potential on the S&P, even as other indices such as the Russell sound alarm bells.
Alarm bells are even chiming in the heavens. The NOAA Space Weather Prediction Center has just released data showing that sunspot totals may have peaked in February over 40% lighter than the last major peak in 2000. If you are scratching your head wondering why it feels like the tech bubble all over again only slightly less so (enough so that the crowd is chanting "This time it's different"), go outside and get some sun. Now you know why.