Pre-market Brief

Good morning...and for those in the EU...welcome to NIRP (negative interest rate policy).  Futures are a little higher, sp +3pts, we're set to open at 1930. Metals are flat. Market is awaiting an ECB press conf. at 8.30 EST.


sp'daily5

Summary

*so far today..

Draghi has announced...

Deposit rate:  lowerered from 0.00 to -0.1%

From what I gather, that is the rate the ECB will charge banks for holding money.

Benchmark rate: lowerered from 0.25% to 0.15% - the headline interest rate.
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There are rumours of a QE program...but...I await the press conference at 8.30am EST.
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Update from the Permabull



Naturally, Oscar will be delighted that savers in the EU are going to get smacked even further. After all, a rising equity market is all that matters right?
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8.34am... sp +6pts..... market starting to break...with new policies announcement....


8.37am...  German DAX hits 10000...first time.

sp +8pts....and climbing....


..all sorts of weird policy measures being announced....

sp' set to open around 1935... upper bollinger on daily AND weekly cycle...

At best..bulls could maybe hit 1945/50 on a Friday spike.


8.51am.. It would seem...

NO QE program, but market is pleased with another LTRO of $400bn or so

Metals are starting to move... gold +$13



9.04am... Equity bears need to keep in mind, there is sig' QE-pomo today....

I do NOT expect a reversal today....but perhaps tomorrow..from 1945/50.


9,18am.. sp +3pts..we've cooled a little, but still.. 1930s are due.

Awaiting the ECB

US, and most world equity markets are awaiting the next scheduled policy announcement from the ECB. It would seem highly probable that interest rates will be fractionally reduced, but that there will not be a QE program. How the market reacts to no ECB QE-fuel, will likely be the big issue for Thursday.


sp'weekly8

R2K weekly2

Summary

I would draw attention to what remains a valid H/S scenario for the R2K. Such a bearish outlook would get dropped on any daily close back in the 1200s, but that is a further 6% higher.
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The R2K/Nasdaq looked pretty strong today, and certainly, are highly suggestive of another 1-2% higher in the immediate term. The bigger issue is whether the R2K is setting up a giant H/S formation. As ever, it is just one scenario, but from a bearish perspective, it is a particularly attractive one for this summer.


Schiff on smaller product sizes



I think most should be well aware of the growing issue of everyday products being reduced in size. In fact, its often worse, with a higher price for a smaller product.

..but hey...the Fed and ECB are telling us deflation is a problem. I guess the Schiff, myself, and many others are just perceiving things incorrectly.

The issue of lower quality products (or services) is something few bring up, and I have to commend Schiff on highlighting it. BBC news did a similar report on electrical items recently. They noted how old washing machines would typically last 10yrs, but now consumers are lucky if their machine last 5-7yrs.

Such issues are a strong sign of the underlying degradation of the western economies.
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Looking ahead

Tomorrow will of course be all about the ECB decision.

My best guess, lower rates, but no QE. The tricky part is whether the market will still believe 'ohh, but the QE will come later in the year'. I'm guessing that will indeed be the outcome, with the broader capital markets somewhat... 'content'.

*there will be sig' QE-pomo of $2-3bn
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Goodnight from London

Daily Index Cycle update

US indexes saw minor chop across the day, sp +3pts @ 1927 (new historic high of 1928). The two leaders - Trans/R2K, settled u/c and +0.4% respectively. Near term outlook is for sp'1935/50 zone, but a minor retrace seems likely.. perhaps beginning this Friday.


sp'daily5

R2K, daily

Trans

Summary

*I would especially wish to highlight the R2K, which appears floored in the 1120s..and set for the 1170/80 zone by the next FOMC of June'18.
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So..most notable aspect of the day, a new historic high for the sp'500, and the sp'1930s seem highly likely tomorrow. Considering the bigger weekly/monthly charts, there looks to be a fair chance of 1945/50 in the near term, before a minor retrace.

I still think the equity bull maniacs are NOT going to hit sp'2000 this year, before a major (if brief) multi-month down wave.

*I am content on the sidelines..will consider an index short this Friday, is sp'1945/50 on a 'good monthly jobs data' spike.
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a little more later...