Morning Charts 05/16/12 #SPX $ES

Not much to say other than everyone is waiting to see if the EU is going to implode and then if the ECB/Fed is going to do anything about it. Everyone is looking for the backstop to magically appear as it always does in these times. The only thing different this time is there appears to much more certainty that an event will happen. It is that deer in the headlights moment where everyone is frozen and fear is real (but not showing in market actions as the Fed/PPT still manage to keep a bid out there at the right price and the right time).

EUR/USD - Critical level is an understatement. Must stick save here is a no brainer. The proverbial line in the sand is that green support diagonal which has held the major lows since 2002. Price came within .002 points from tagging it last night and that may have been it. It should take something more than news or rumors to crack this point. If this goes it should be a duck and cover moment. My technical read of this is that we experienced either a real breakdown and much worse is to come or this was a blow off excessive move bottom that is about to bounce back possibly as high as to close the second gap near 1.30.