Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
We’ve been talking endlessly the past week about “intervention” as the market has attempted to rally on one form of it or another continuously (but failing) – remember the “IMF rescue of Spain” last Thursday or the “envisage a banking union” last Wednesday? Both led to lifts which didn’t last… and created a trap for those long going into that bloodbath last Friday. Today appears to be the day the intervention bandwagon is loading up as futures surged last night many hours ahead of the ECB’s decision which is now imminent. Days like this are very much like an earnings report for a company, except for the whole market where there are bipolar outcomes. “Risk on” or “risk off” (student body left trading) has been in full effect since April …
All I can say is Mr. Draghi better deliver or there is going to be serious disappointment. As I scrolled through quite a few financial blogs yesterday morning I could not find a single one where “intervention” was not mentioned – we are now fully trained slaves to the theory it must come each time we get even a 10% dip. 
Obvious levels as long as Draghi delivers is the gap down created Friday morning on the jobs news. Thursday’s close was just under 1299. Above that the 10 day moving average is 1307, and the 20 day moving average is 1320 and falling quick. Keep in mind even a move as high as the 20 day moving average at this point only takes the S&P 500 back to where it was Thursday morning! Once we scroll through Yellen’s speech tonight and Bernanke’s speech to Congress tomorrow we will see where it all shakes out. Keep an eye on the U.S. dollar and 10 year bond to see how far they pull back as well – both have been very overbought but for any rally to have legs for more than a few days it would be a benefit for them to not just pull back to support but reverse their trends.
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