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Thursday, March 10, 2016

Thursday -- Draghi Moves Big: Aggression Or Desperation

S&P E-mini Futures:
Sky high.

Draghi did it.

From Marketwatch:
"The European Central Bank on Thursday cut its key lending rate to zero, pushed its deposit rate further into negative territory and significantly expanded the size and scope of its asset-buying program.

"ECB policy makers cut the bank's key lending rate, known as the refi rate, to zero from 0.05% and pushed the rate on its deposit facility to minus 0.4% from minus 0.3%.

"The central bank also announced it would expand the size of its monthly bond purchases to 80 billion euros from its current level of 60 billion euros beginning in April and would include purchases of investment-grade, euro-denominated, non-bank corporate bonds.

"The ECB also said it would launch a new series of longer-term refinancing operations with maturities of four years."

It is these long term refinancing operations that are the most stunning, essentially paying banks to take loans. Truly reckless in this era of money velocity approaching zero.

Europe is loving it -- all green, up well over 2%.

Asia ended mixed -- Shanghai down 2%, Nikkei up 1%.

Euro taking the most damage on Draghi's move. AUD & CAD down as USD rips higher.

Prices seem fairly stunned. Currently weaker.

WTI crude showing a weird line in the sand at 38.20-38.50 thus far. NG continues to bounce.

With the exception of copper, metals having a rough go thus far. Confidence in central bank returns?

S&P Outlook:
Today the Fibonacci confluence at 2023.47-2027.60 should come into play, and if it isn't, things could flip around to the dark side.

Again, this area comprises an important 78.6% retracement, a 1:1 Fib extension, and trend line resistance.

Slightly lower is a gap at 2016.71.

With today's aggressive move by Draghi, any pause or hesitancy could get volatile -- faith in central banks could dissipate as quickly as it reappeared, and aggression could rightly become interpreted as desperation.

Bot more UVXY in pre-market.

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