Price Levels Beginning to Look Attractive for Long Entries, But Slight Lower Lows Likely

We got the lower low that I was waiting for on the ES, though the SPY hasn't quite filled its gap from 11/29 (about 1190-1191 on the ES). The ES is now flirting with what I expect to be the lows for the remainder of 2011. That being said, there is no sign that the lows are in yet. I think a better long entry will come between 1185-1192 on the ES. From there I will be looking for about 30-40 points to the up-side. EDIT: SPY actually did fill the gap from 11/29. I meant that if you look at the chart in terms of the ES, the closing price on 11/29 is at 1190.

The bigger picture is still looking bleak. Mario Draghi and the ECB have been reluctant to fix the Euro Debt situation with more money printing. This is basically the same as saying that the acceptable alternative is deflation. Draghi has made it clear that he prefers finding a solution to fund the EFSF in order to pay off debt for countries like Italy, Spain and the other PIGs. The problem is, there has yet to be a viable proposal as to how to make this happen. The result has been obvious; the Euro has sold off, the dollar has seen a bid as a safe haven alternative and Equity markets around the world have declined.

We will eventually see some form of money printing in my opinion, but things might have to get worse first. Central Banks understand that printing money will be frowned upon and viewed as a catalyst to inflation. It will likely send the prices of gold, silver and commodities through the roof. So, when they do print money, it will be a clandestine effort.

In any case, I think the markets are due for a bounce into the end of the year. I like longs at 1185-1190 ES.