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Tuesday, February 2, 2016

Daily update 2/2 European banks

Big splat.

SPX closed back below its 20 SMA.  This is not surprising given the slope of the 20.  Breadth ended at -78%.  It was -86% early in the day which suggests there was a little bit of dip buying in some issues.  New highs dropped to 69 while new lows increased considerably to 123.  The TRIN was 2.2 which may be enough to bring out buyers in the morning.

The futures ended the trading day right at the 20 SMA.  They are slightly below the line on the current bar as I write this.  Tomorrow is do or die time for this bounce.

The indexes are in a short term uptrend.  It looks like we are at the critical juncture once again where the bulls need to come out tomorrow to keep the bounce alive.  The high TRIN reading might bring out some dip buyers if the overnight news flow permits it.  While this market is clearly struggling to go higher it might still be able to do that.  Another down day tomorrow would likely kill the bounce and setup a retest of the lows. 

This is an interesting chart.


European bank stocks are down almost 40% from the day Draghi unleashed NIRP in Europe. Today's plunge takes out recent lows, pushing prices back to almost "whatever it takes" lows.

I can't imagine how the economy in Europe can get better with the bank stocks crashing like this.  A year of negative interest rates killed their profits.  This is what the bank stocks looked like in the U.S. in 2008.  Is Europe going to have a big financial crisis?  Negative interest rates are an insanely stupid idea. 

I think the global economy is on fire from the debt burden and the aging population while central banks are pouring on gasoline.  I am pretty sure future historians will be wondering what in the hell  were those people thinking back then.  I believe the depression our leaders thought they prevented in 2008 will happen anyway.  Because of their actions it will be much worse then it would have been because the global debt level has increased by 50% since 2008.  This is one time I would really like to be wrong.  Time will tell.


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