The collision of global markets and social mood

Wednesday, November 4, 2015

Wednesday -- Draghi Vs Druckenmiller

S&P E-mini Futures:
Hanging at highs.

Stanley Druckenmiller is in the news again after an investment conference presentation where he announced he is short the euro but is less certain about stocks.

“I could see myself getting bearish, and I can’t see myself getting bullish,” he said.

His takeaway of ECB President Mario Draghi's much-awaited speech is that Draghi “pretty much pre-announced step two,” signaling either a further cut in the discount rate, more quantitative easing or both, according to Bloomberg.

Meanwhile Draghi is calling for a more federalized Europe. Of course. He's a globalist tool.

"It is now high time that these other aspects of banking union are also completed," said Mr. Draghi.

He and other globalists seek to use the Greek overspending problem (along with Portugal, Spain, Italy, and Ireland) as the reason for more centralized command & control from Brussels, even as command & control from the Fed has created an utter mess (*seen below).

In a cage match of Draghi versus Druckenmiller, I'm with the Druck.

EUR a bit shaken by dovish Draghi comments. USD higher. CHF slightly stronger.

Prices trying to rally, but still not in happy land, and equities still blissfully ignorant of it.

WTI crude needs more escape velocity. Perhaps in a holding pattern ahead of today's API numbers. NG rallying.

Gold higher, copper following stronger, yet silver lagging in relative strength.

S&P Outlook:
For all the market's apparent gusto, VIX closed higher on yesterday's rally. Take note.

One of my favorite charts showing the ETF performance of SPY and IYG (financials) vs HYG and JNK (two measures of speculative-grade credit) since the August lows. *This is another example of what the Fed's centralized command & control has wrought.

How could the market either be in a B-wave or a Wave 3?

B-waves are corrections containing an A-wave impulse, a B-wave correction, and a C-wave impulse.

Wave 3s are usually the strongest portion of an impulse.

B-waves are known as "sucker rallys" while Wave 3s are "a wonder to behold," according to Frost & Prechter's classic book Elliott Wave Principle.

Credit suggests a sucker rally, while price itself suggests Wave 3. I'll take either.

In fact, a Wave 3 scenario might provide even more volatility than a B-wave at this point.

The bottomline is that we could simply be in the C-wave of a larger B-wave that for a brief time is mimicking the character of a Wave 3.

Regardless, here is a close up of possible subdivisions for the next few days. Still thinking the gap at 2119.21 wants to get filled. But note the stop for this scenario at 2097.51.

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