Investors were disappointed with the European Central Bank and Mario Draghi today. The tone from regulators in Europe definitely turned bearish. Markets in Europe were down sharply across the board.
Meanwhile the U.S. economy is still slowly improving. The world economy is very interconnected. How long can we grow while Europe continues to sink deeper and deeper into a widespread recession?
U.S. stocks bounced off their midday lows but that could have been short covering ahead of the weekend and ahead of the Friday morning nonfarm payroll jobs report.
The jobs report will come out before the opening bell and stocks will likely gap open (up or down) on the news. We are not adding any new trades tonight.
I will share on trade idea. The weakness in oil should be bullish for transports and analysts are forecasting more lows for crude oil. Currently the Transportation sector ETF (symbol: IYT) is testing support at the bottom of its long-term bullish channel. A bounce from current levels might be an entry point in the IYT but I'd like to see it above short-term resistance at $150.00 and its simple 50-dma.