Earlier in the week, Euro markets positively decoupled from sovereign fears. Today, following a successful ‘Portugal’ auction the US markets finally played some catch up to the Euro markets move of the past 48 hours by breaking a YTD consolidation (20pt range). The ‘Peripheral’ wary has been diminishing as China, Japan are speculated to be buying into these debts (inc. China into Spain’s on Thursday). This ‘helping’ participation is why noted here yesterday…” or a bad sovereign bond auctions later this week (shorts likely futile hope)”. As important or more today was the ‘speculation’ of Monday’s European Finance meeting and an expansion of the bailout fund to get the market going. A week so far of little economic/ few earnings and so a ‘relief’ catalyst from Europe allowed this market to move easily as it's the only happening around. The market moved out from ‘inside the 20’, but it’s hardly a touchdown.
Why, not a TD? ...Even though the move was broad with all sectors up, it was more of the same ES/ETF driven move continuing from Tuesday, plus the ‘leaders’ didn’t play along. (See below in Shadowlist updates). It was hardly a perfect tape, but with Peripheral worries abating the market can let earnings decide its fate. The lack of participation today of the ‘winners’ could just be a symptom of this wait game for earnings and nothing else. All in, need to see a follow through into weeks end.
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