1:50pm (EST)
The bears have controlled much of today’s action after a mixed open and managed to push the major indexes lower by 1% about an hour into the session. The bulls have been trying to make into positive territory ever since and they are getting close as we head to press.
We mentioned this morning that futures were pointing towards a strong open last night before we hit the rack but faded as we got closer to today’s opening bell. News that Treasury Secretary, Tim Geithner, was “very encouraged with the progress that is being made” helped prop Europe’s open but comments that doubted a merger between the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM) have kept things in check.
There is hope that by combining the EFSF and the ESM, it would create a bailout fund with over $1 trillion to help solve Europe’s debt crisis. As this gets debated for the next day or two, the market is on hold as we approach tomorrow’s ECB meeting and Friday’s EU summit.
The trend is still bullish but the important thing about last night’s futures action is that they were challenging the October highs. The chart work we showed you on Monday clearly shows how close we are to a major breakout but trusting politicians to get anything accomplished by a deadline is risky.
If Europe announces a rate cut tomorrow and turns on the printing presses Friday, the bears could be hibernating for the rest of the year. If they slip, or kick the can down the road a little further, the bulls will be in trouble.
Currently, the Dow is up 25 points to 12,175 while the S&P is lower by a point to 1,257. The Nasdaq is down 5 points to 2,644. Our trades are holding up well so we don’t mind being patient.
In fact, we have a NEW TRADE we are releasing right now that we listed on our Watch List this morning so let’s get on it. Subscribers, check the Members Area for the updates.