Today should be the day. EURUSD and DX have both broken their wedges, which should help stocks break out of the dungeon they’ve been locked in for the past several days.
Is anyone else struck by the similarity of the past three days to that of Aug 31 – Sep 5?
The key to the upside is breaking above 1388.81 — the Point B in the little Crab Pattern I expect to play out. The key level on the downside is 1368.31 — the .886 of the 1354-1474 rise. A break means our 1346.11 target is in play.
UPDATE: 10:45 AM
SPX fell slightly through our 1368.31 Fib level, but is showing positive divergence all around. And, DX and EURUSD have both completed back tests of their wedges.
Olli Rehn, Finnish ECB economics commissioner, was rumored to be announcing something about Spain’s possible bailout request. But, I’m watching the press conference, and it seems to be focused solely on gender equality on corporate boards.
Live here: http://ec.europa.eu/avservices/video/player.cfm?ref=89737
UPDATE: 11:00
Reuters just reported that the Rehn comment was just an assessment of the current situation in Spain. There’s no announcement of a bailout request. In fact, if anything, it appears a bailout request won’t be forthcoming, so the markets are disappointed.
While Spain will miss the nominal deficit targets set by the ministers, it meets the structural adjustment requirement, Rehn told a news conference.
In structural terms, which strip out one-off revenues and expenses, as well as the effects of the business cycle on government income and spending, the ministers asked Spain to cut the deficit by 2.7 of GDP in 2012, another 2.5 percent of GDP in 2013 and 1.9 percent of GDP in 2014.
Rehn said Spain’s structural balance improved 5.25 percent in 2012 and will improve a further 2.25 percent in 2013.
“The estimated annual improvement in the structural balance this year and next year is in line with the effort required,” Rehn said.
“Yet there are risks for next year, they stem partly from an optimistic macroeconomic scenario underlying the 2013 budget. There are also risks of budget slippages in the autonomous communities. It is vital to implement effectively the provisions of the stability law,” Rehn said.
He also cautioned that Spain’s budget measures for 2014 fell short of expectations for now.
Rehn’s press briefing can be seen here. He doesn’t anticipate revisiting the need for ESM/ECB assistance until February. No Spanish QE candy, today; should head down.
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