STOCKS: The European debt contagion has been “kicked down the road” as Spanish and Italian short-and-long term bond yields have moderated recently given the ECB “plan” to buy bonds of up to 3-years in maturity, but only if asked; and only if conditionality is imposed upon those asking. The Fed has also changed its game from “inflation-fighting” to “unemployment fighting” with the new move to QE-4; and with any war — they will go further and farther than anyone believes in printing money to achieve their ends, regardless of their balance sheet concerns.
STRATEGY: The S&P 500 remains above the 160-wma long-term support level at 1268; and the standard 200-dma support level at 1396. Collectively, with the breakout above the Sept-2012 highs at 1475 likely to be fleeting given the relative under performance of the NASDAQ 100. We are long of gold; and we are short the NASDAQ — and today we shall be short on the opening with the Russell.
WORLD MARKETS ARE MIXED ALONG REGIONAL LINES THIS MORNING: Asian bourses are higher led by Japan +2.3% and China, up +1.0%. However, Europe is lagging once again, with the main Germany-France block down very modestly, -0.3%. That said, Italy’s market is taking the brunt of the selling – down -2.0%. Italy’s bond yields are rising by +4 bps to 4.24%. In fact most 10-year paper in Europe is higher this morning – led by the Czech Republic, up +8 bps to 2.07%. In other words, even though Europe and US stock futures are down this morning; the bond market yields are rising in each case. Too, the US dollar is falling against most of the currencies save for sharp move higher in the Euro and the Swissy – and a modest gain in the British Pound.
To Read the Entire Report Please Click on the pdf File Below.