Faltering Thursday – Draghi’s Brexit Fears Push EuroStoxx Back Below 3,000

Things are turning ugly again.

We are now officially short on the market and just in time, it seems as the EuroStoxx index is down 0.666% for the day and 3.33% from the top and it's another 145-point drop to our next support at 2,850 but call it the 5% Rule™ from 3,000, of course.

Speaking of the 5% Rule™, we nailed it with our oil prediction yesterday as Oil Futures (/CL) topped out right at $51.67 and, as I said in yesterday's morning post: "Our plan is to short 1x here ($51.15) and go to 2x at $52.25 to average $51.70, then half out at $51.70 and we'll see how far it falls."  We didn't go quite as high as we'd hoped but our oil shorts already paid off nicely this morning as we fell back to $50.80 and we stopped out at $50.85 and now we're back short again below the $50.80 line, hopefully for a ride back to $50 but a tight stop still at $50.85, which risks a $50 per contract loss against possible $800 per contract gains, again:

We knew it would be something – that's why we called for CASH!!! on Tuesday, while everyone else was in a greed-buying frenzy.  Today we can blame Mario Draghi, who spoke at the ECB's Economic Forum this morning and sent the markets into a dive (down 1%ish in Europe) by saying the truth – that monetary policy alone could not fix Europe's problems and that "if other policies are not aligned with monetary policy, inflation risks returning to our objective at a slower pace."

This marks a big shift from Draghi subtly hinting that the ECB needs to provide its own stimulus programs (preferably infrastructure spending) to outright begging as it's becoming clear that QE is losing it's effectiveness in the stalling economies of Europe and, as Draghi notes, it's not enough:

Bank balance sheets have not yet been fully repaired, as illustrated by the high stock of non-performing loans in some parts of the euro area. So more work-out of these non-performing assets will have to take place, and the


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