Morning Brief Wednesday August 1, 2012

Good Morning. Today will likely be anything but boring. At least once ISM manufacturing is announced at 10AM and then with the release of the FOMC statement at 2:15PM. There is a chance markets will move higher into the close in anticipation of the ECB meeting pre-market on Thursday but with the Bundesbank already speaking there is little Draghi can deliver.

Perhaps another rate cut? Beyond that it will be difficult for him to follow through with actions on his strong words from last week.¬†Credit markets already priced in nothing from the ECB as yields on the periphery moved higher while the safer “core” moved lower.

In Tuesday’s Market Recap I discussed momentum and how the small caps were gaining downside momentum. Today’s close will be very telling of the momentum trend. Including how markets react to the Fed statement.

Another sign of a potential shift in momentum is found in the vix which is up 14% since the Friday intraday lows contrasted with the SPX up 1.4%. Not only is

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