Thursday Market Update -- Draghi & the ECB

News:
The world awaits the final decision from the ECB today regarding QE. Yesterday they floated a trial balloon of $50 billion per month which is quite small. The reaction in the EURUSD said it all: it rallied, as if to say, is that it?

Interesting that the German DAX is down today (at this writing) while the rest of Europe is up. Reason: the rest of Europe would benefit from QE while Germany would have to pay for it.

The news comes out at 8:30am EST. It should be interesting.

ES futures:
Modestly higher after trading in a tight range all night.

FX:
Oddly quiet this morning after the surprise rate cut from Canada and the ECB trial balloon. Still looking to trade a bounce in EURUSD. About flat since winning two FXE call trades but losing an entire tranche of FXE calls afterward.

Bonds:
10-year notes continue to display an eery amount of volume in the overnight session. Shorter durations seem to be sluggish which could mean their yields are about to rise which could lead to an inverted yield curve...dangerous.

Energy:
Crude is up 2%. Seeing a large rise in open interest in the March contract. Maybe a bounce brewing into the 55-58 area, but not thinking the final lows are in. The process could take much longer than most are expecting. Using USO calls. 2nd tranche after the first one got totaled.

Metals:
Gold is taking a much needed breather after its rally from the 1167 area. Objective is 1392.60. Have been playing this using Goldcorp (GG).

S&P outlook:
Regarding yesterday's chart:

It occurred to me that wave 2 is not required to probe below 1972.56, In fact, the textbook diagonal from Frost & Prechter's Elliott Wave Principle shows it remaining the prior low. Here's an image I pulled from the web. Note that B of 1 in this case would represent 1972.56.

Source: wavaholic.com

The expectation therefore is for the S&P to rally strongly to a new high (3). A rollover near current levels or stall in the 2060-2070 area with weak internals and punk volume could set up a deeper probe below 1972.56 as mentioned yesterday.