There are so many conflicting stories, opinions and strategies being floated in Europe right now, and the markets are bracing for the next two weeks of market-moving events. As headlines grow more complicated and the equity markets are coiling–it feels like a big move is coming soon, and everyone seems to think they know which way it has to go.   I sometimes have a strong Thesis or can help handicap the direction, but I have no strong conviction as of now.

I do know that all the problems we face are complicated and the stimulus game hasn’t worked, but the question is: can the big guns fire one more “Bazooka” to buy time and give us another rally based on hope/stimulus?  Will this set up a bigger potential doomsday scenario down the road that doesn’t seem so farfetched.

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My common sense inner voice gives me an uneasy feeling every time I read about what is truly taking place in Europe. The Tax Evasion, the Broken Entitlement system, the culture differences – the lack of a Fiscal Pact and the lack of Commitment to enforce any measures that have already been set. The fact that all these nations want to abandon the Austerity measures they agreed to in order to get funding and go back to the ways that got them in so much trouble is despicable, and so is the fact that the stronger ones are bending and letting it happen. The Eurozone went from throwing good money after bad, to throwing bad money after garbage. It feels like the world doesn’t believe in accountability or tough love. Short term easy decisions lead to much bigger problems (my Grandma would be pissed). I also think the short-sighted nature of politics plays a huge role in these policy decisions, which is why we should have strict term limits for all politicians.

ANYWAY—I will not make big bets and I’ve been just tactically maneuvering both long and short the last few weeks. I’m ready to jump on a direction as I get more clarity. Here is my dummied down plan:

If the S&P breaks and closes below 1306-1309 the downside it will intensify the sell-off, and uncommitted longs will get out of the way (this would be a spot to short). You have small support at 1295ish then 1266 was the pivot low. I will revisit other potential levels if this gets in motion.

If the S&P breaks above 1335-1340, uncommitted shorts will cover and some momentum guys will come in (this is a spot to buy). The 1356-1360 level would be a decent spot to reach (I will talk higher levels later if this transpires).

Most sectors and stocks have defined support and resistance that we can trade against as the markets will tell us the next short term direction. Unfortunately it will probably resolve overnight! The only way to participate is with some risk on – either long or short. I suggest the use of options so your risk is defined and premium is paid.

Apple (NASDAQ:AAPL) can give clues. $579-581 is big resistance, if we break above there with volume and commitment perhaps range is getting resolved to the upside. If it breaks $566-569 it can correct further that will then give us downside clues.

VIX (NYSEARCA:VXX) was decent to watch yesterday as its divergence pointed to afternoon market failure.

Gold (NYSEARCA:GLD) still hangs under intermediate resistance levels. It put a “lower high” in yesterday, but that’s not so important. A BIG move over/close over GLD $159 will put this in upside motion.

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