This has been an interesting morning. Given the feel of the market in the very early going, I wouldn’t have been surprised to see the futures roll over, followed by the SPX, but after holding for severalÂ minutes at and belowÂ 1188.50, the break higherÂ was good for several points, to 1191.75; another break higher just aÂ moment ago has now brought the index to 1194.75.Â Â I bought the first half hour breakout, one of Todd’s techniques, at 1188.75, making a quick point and a half; I’m now looking to buy a pullback, although the easier trade today has been buying breaks of resistance,Â as there haven’t been any significant pullbacks since the inital break of the day’s high.
There really isn’t much in the way of news. I’m still puzzled by the euphoria created by the announcement by Germany’s Merkel and France’s Sarkozy that they’re going to have a plan to recapitalize Europe’s banks in the next three weeks. The real issues, it seems to me, are how that’s to be accomplished, and how much money is involved. The Germans also seem determined to make private holders of Greek debt (i.e., the banks) take far larger “haircuts” than the previously agreed upon 21%. I don’t know anyone who thinks that Greek debt is worth 79 cents on the Euro, but altering agreements as whim dictates doesn’t strike me as a way to build investor confidence.
The market is backing off a bit now as Europe heads out of the office. I’m not confident enough as to direction to be very aggressive here, so, following Todd’s practice, I’ll wait for one of the three price patterns that he teaches us to use. The other tactic that he teaches is just to step aside when confidence is lacking. Missing an opportunity is a lot better than losing money. We are awaiting the results of the vote to expand the European Financial Stability Fund (EFSF) in Slovakia. Slovakia boasts roughly 1% of the Eurozone’s population, but a “No” vote will send Euro officialdom back to the drawing board. There may even be a second vote at a time to be specified, in return for new local elections. It’s tough to tell the players even with a scorecard.