S&P500 futures were rallying over night, this morning, all those gains are gone as the market treds water.
Banks remain the key for this market in the short to medium term.
Not helping matters for the banking sector is the negative interest rate policy of the ECB. While it has helped propped asset prices, it has cut into the ability for banks to earn money.
There are two possible outcomes.
- $DB is left to rot, bringing down the entire financial sector.
- $DB gets bailed out and it's stock price at current levels ends up being a tremendous buying opportunity.
The odds #1 happens are slim, perhaps 5%. #2 is the heavy favorite. Make Banks Matter Again!
With that being said the timing of the $DB turnaround is the question. Could this linger a few more weeks? Yes. Odds are the alarms will sound at some point, and over a weekend in the near future some sort of life raft with be sent $DB's way. Stock futures will soar, and the market will go on its merry way to new record highs.
However until that happens uncertainty will abound.
Let's keep a close eye on S&P500 futures support, as well as the key 2,100 level which held previously.
Until we get a break either way, the market is in chop mode.