If you are wondering why stock futures reversed so quickly morning, as European stocks were falling again after their open, this was leaked to the media (from Bloomberg):
European Central Bank policy makers are likely to next week debate restarting their covered-bond purchases along with further measures to ease monetary conditions, a euro-region central bank official said. The reintroduction of 12-month loans to banks will also be discussed at the ECB’s Oct. 6 policy meeting, said the person, who spoke on condition of anonymity because the information is confidential. Interest-rate cuts are likely to be discussed, though they are not on the current agenda, the official said.
These moves are unlikely to change market dynamics longer-term. However, they could have an impact over the coming days and weeks. Central bank and government intervention is to be expected. If you recall, stocks reacted positively in the short-run to several government announcements during the last bear market. However, the bounces were often short lived.
As mentioned in last night’s post, the S&P 500 faces a cluster of resistance between 1,149 and 1,180. A break above 1,180, would bring 1,193 into play. If you see the S&P 500 go up by roughly 10 to 15 points this morning, keep in mind last week’s drop was 106 points from top to bottom. Markets do not go straight up in a bull market, nor do they go straight down in a bear market.