Although, OECD (organization for economic co-operation and Development) says the world must “be prepared to face the worst”, this morning, a Global stock market melt up ~3% is underway because an Italian newspaper reports IMF is preparing a bailout for Italy/Spain. The report says France/ Germany are planning a quick new pact on budget discipline that might persuade the ECB to ramp up its government bond purchases. A German led 6 nation bond issuance for Club Med countries is also making the rounds.
How credible is all this chatter, speculation? Who knows!
Market just needs hope out of the Eurozone to move. This weekend is sounding familiar to the start of October rally as we rallied into summits. Note Dec 8/9 summits noted last week. Also, finance minister meeting next few days.
What’s likely also important is its post-thanksgiving/ successful Black Friday after a big market dump last week. It is simply in a position to bounce due to seasonality and recent sell off.
”If the market is to rally in the last 5-6 weeks from Thanksgiving as it has consistently over the years.." Market needs Financials to move like they did during October rally.
A question is how long will this momentum last? Most of the recent upward moves have failed almost immediately, (see even last Friday).
Diving into ES futures up 30-35 handles to approx. 1188 in front of key resistance at 1200 could be a risky proposition.