Europe Going Down the Drain

Europe cannot sustain itself without a QE.  Draghi knows this.  You have banks in Portugal with serious credit problems, and that is spilling over to Spain and Italy.  This is a little mini 2011 version of the European sovereign debt crisis.

I cannot remember the last time we've had such a big gap down, it must have been a while ago.  Looking back, last week on the nonfarm payrolls seems like the good news top for stocks, and a bad news bottom for bonds.  Since then, they've gone in opposite directions.  With Treasuries being heavily shorted, and most fund managers underweight safe assets, you get monster rallies on very little, like you saw after the Fed minutes that showed that QE was likely to end in October, a bit earlier than expected.

The futures are getting pummelled as I write this.  I wrote the other day that ES support around 1943 is solid, which is SPX 1950.  We are only 5 points away from that level.  It might be worth it to put in a small long position at 1943 and then see if the market stabilizes.  I don't have much faith in the long side at these nosebleed levels, so will keep size small.