Ozymandias Speaks

Draghi made an impressive announcement this morning that the Euro is irreversible and, in effect, that the ECB will do whatever it takes to save the Euro. Both EURUSD and ES have spiked up impressively this morning on the strength of that. Now this won't be the first time in history that some European has made grandiose statements that didn't stand the test of time, many will recall that a past German leader made not dissimilar statements in the 1930s that didn't work out, but be that as it may, in the short term this looks impressive.

In honor of Draghi's bold statement I am dusting off one of my favorite poems by Shelley to share with you this morning:

I met a traveller from an antique land

Who said: "Two vast and trunkless legs of stone

Stand in the desert. Near them on the sand,

Half sunk, a shattered visage lies, whose frown

And wrinkled lip and sneer of cold command

Tell that its sculptor well those passions read

Which yet survive, stamped on these lifeless things,

The hand that mocked them and the heart that fed.

And on the pedestal these words appear:

`My name is Ozymandias, King of Kings:

Look on my works, ye mighty, and despair!'

Nothing beside remains. Round the decay

Of that colossal wreck, boundless and bare,

The lone and level sands stretch far away".

Why did this particular poem spring to mind? Who can say? On to the markets.

I was talking this morning about the setup for a bounce and possible return to last week's highs. On the ES 60min chart we now have higher lows and highs from Tuesday's low and since I capped this chart ES has been as high as the 1355 area. Short term an uptrend is established and we'll see where that goes:

On the SPX 15min chart I have a support trendline from the low on Tuesday that looks likely to hold this morning. We're already above it on ES but I'm watching the 1353 area as a possible IHS neckline so we'll see whether SPX opens above it:

Also in the 1353 area today is the middle bollinger band on the daily chart so that is very much the key resistance level to watch today. the 100 DMA is in the 1359 area:

I've been mentioning this week that EURUSD has now completed a massive H&S pattern that has taken nine years to form. The neckline is an obvious support level of course and a bounce from there is not unexpected. Short term declining resistance has been broken and I have next declining resistance in the 1.245 area, and main declining channel resistance in the 1.28 to 1.285 area. If the declining channel breaks I will be very surprised, and pledge to retract 25% of the uncharitable 'thousand year reich' jokes that I have been making about Draghi this morning:

I posted the symmetrical triangle on gold a couple of days ago, giving the next likely target at triangle resistance which (buffs fingernails modestly) was hit at the high yesterday. In the absence of a breakout here the next target is triangle support just over 1560:

The last chart for today is AAPL, which I was looking at this morning as it is an important market bellwether. AAPL tends to trend well and form decent support trendlines to signal important reversals so the breakdown yesterday morning looks very significant and I'm expecting more. I have important support areas in the 565 and 525 areas and a break below 522 would trigger a technical double-top target at 400. Short term we could well see a bounce to test broken rising support in the 590-600 area:

I'm only seeing this as a bounce. The very bullish scenario to new highs I outlined yesterday morning seems unlikely in the absence of major Fed intervention, which seems unlikely unless the equities beat the June lows by a decent margin. Still, a new short term uptrend is established for the moment. We'll see where that goes.