Home > Uncategorized > 2012/06/12: Quick Post: Courtesy ‘Brief Update’ on Equities swing and markets volatility

2012/06/12: Quick Post: Courtesy ‘Brief Update’ on Equities swing and markets volatility

© 2012 ROHR International, Inc. All International rights reserved.

Short & Sweet on the specific market comments in this post, because today’s TrendView Brief Update is an extended discussion of the volatility of the equities swing yesterday. Of course that also related to quite a few of the other asset classes that are influenced by the equities; not the least of which are the primary government bond markets.

And while the story broke after our research had been published this morning, it appears some new “limited Euro-bond” issuance is being mulled over by the Germans. That would obviously be a big step toward addressing the chronic bailout funding for the weaker southern sisters. Yet, once again, right now it is only so much discussion. And whether Chancellor Merkel can get her countrymen to go along with something like this is another matter altogether.

On one hand, it seemed just another driver of the extreme shifts between agony and ecstasy on the European influence for the global markets. And as a CNBC interview of the Financial Times’ estimable Martin Wolf on Friday morning pointed out, this must all happened very timely; while not noted there, is likely must look viable in front of this weekend’s Greek elections.However, there is already a market implication that is being inferred from any plan of that sort…

 

 

…that is the degree to which any plan of that sort will be a drag on the otherwise strong German fiscal situation. Yet, that is not exactly a surprise. We have noted at many points along the way that the haven bid in the strong sister German Bund was likely to be reversed by any significant address of the Euro-zone Sovereign Debt Crisis. The obvious reason is that the Germans for the most part along with their northern tier European cohorts are the only ones with the funds and/or credit worthiness to float such a scheme.

General Market Observations

We shall see what becomes of that. For right now the September S&P future failed yesterday morning on its overnight electronic trading retest ofthe major resistance (violated support) in the 1,338-1,350 range. Once it started to weaken it was reasonable it should come under pressure back down to revisit interim technical levels at 1,310 and 1,297. That was also very consistent with DAX stalling near failed 6,300 area support (now resistance) on its rally back up from 6,000 area.

EXTENDED TREND IMPLICATIONS

These are substantially the same as the previous indications. The most telling for right now on the other asset classes is the weakness of the September Bund future below the key 142.85 level; even as the September Gilt future and September T-note future are holding and well at their supports. And in spite of the excitement over the new European proposal, the euro is still having problems at EUR/USD 1.2500-1.2550, which it did not spend very much time above yesterday after the modest squeeze above it last week. All other indications remain the same as previous analysis; and there are link backs in today’s TrendView Brief Update to previous analysis through yesterday’s Market Alert as well.

Thanks for your interest.

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