Risk Trends Have S&P 500 On Verge of Break, Euro Moves Closer to QE

Talking Points:

• The S&P 500 put in for its fourth consecutive decline, but critical support stands at 2,000

• A breakdown from US equities would leverage risk aversion, but a hold doesn't gaurantee a broad rebound

• Meanwhile, an EU court assessment has cleared the way for ECB stimulus and EURUSD, EURGBP bears

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Risk trends are once again front and center. The S&P 500 - as the holdout to wavering global investor sentiment - dropped for a fourth consecutive trading day. This bear phase is matches the most consistent tumble in 16 months, but conviction from this benchmark is far from assured. Critical support stands below the US equity measure, and the recognition of the confluence of technical cues at 2,000 (two-year channel floor, 200-day moving average, Fib retracements, psychological level) means a make or break here can generate conviction in the next swing in broader speculative trends. Aside from the market's risk focus, top fundamental event risk this past session came through the EU court's (non-binding) ruling that found the ECB was working within its capacity to introduce the OMT program in September 2012. This can ease the way for the central bank to introduce an open-ended QE program similar to the US, Japan and UK as early as this month. We discuss these top trends and their market impact in today's Trading Video.

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