It's all about the Euro

Late yesterday I showed you several early signs suggesting the Euro would move up.

Here's the Euro (EUR/USD)

 The red arrow is yesterday's 4 p.m. close and we've seen a rounding type bottom since.

Overnight there wasn't much to celebrate in the EU, there was a report the ECB is scaling back funds to Greece that are supposed to be going toward recapitalizing its banks (that are now seeing bank runs), but the cash never quite made it there. The news sent the Euro lower in the red box, but overall it kept moving higher. Is it because France and Germany had record low yield auctions of 5 and 10 year debt? I doubt it as those are flight to safety trades.

Is it because Merkel and Hollande met and proposed growth measures for Greece so long as it sticks to the austerity bail-out plans required to stay in the Euro? I doubt it. Greece couldn't form a government, there's now a caretaker government in place and new elections on June 17th in which the anti-bailout party, Syriza looks ready to sweep the elections, so what Merkel proposes is useless with Syriza in power.

Or maybe the US economic data in which housing starts beat, but permits missed? Or Finally US Industrial Production? The problem is the trend was already under way before all of that. I suspect it's something else, as I noted yesterday, someone may just know something we don't yet.

In any case, the "U" shaped move in the Euro gave ES a similar shape (A bit sharper) and we have a nice gap p this morning, courtesy of the Euro with good early momentum in the market and a now official head fake move during yesterday's afternoon session, likely some shorts are feeling a bit of a squeeze, but we still need to see a break out of the range.

 SPY open...


Yesterday's head fake move below the range, lot of volume, it did its job. Now the $135 area needs to be taken out and we may just get that short squeeze finally.