PIIGS in a Poke?
In either case, I’m sure the domestic bears will have their eyes fixed on the PIIGS.
While country after
country in Europe is either in the midst of a debt crisis, or on the
verge of slipping into one, European stocks posted their largest weekly
gain in 14 months. Positive news out of the U.S. and Germany did
nothing to stem the selling in U.S. equity markets, however, Germany’s
pledged support for an euro-area rescue fund, helped the European
markets pare quarterly losses.
While the debt crisis in Europe still appears to be far from resolved, the charts of the FESX and FDAX, may be pricing in some kind of resolution or stop-gap. While both indices had shown relative weakness to the SPX, having already taken out their early August lows, hedging activity in an attempt to circumvent the European short selling ban, may have been the cause. For now, the FESX and FDAX have put in double bottoms and are forming bullish falling wedges, although the volume has been relatively low and liquidity relatively thin. The US. dollar meanwhile has sold off from it’s August highs, which may suggest that Euro-zone money that had previously sought safety in in the U.S., is being repatriated to Europe.
The main source of the world's fears these days has been found in the Euro-zone sovereign debt crisis, so it will be interesting to watch the European markets next week, for further signs of real strength. It just may be that the European market "got ahead" of itself due to the hedge activity, and the market is now being run up to shake the weak shorts, trap some new longs, and add to existing shorts.
While the debt crisis in Europe still appears to be far from resolved, the charts of the FESX and FDAX, may be pricing in some kind of resolution or stop-gap. While both indices had shown relative weakness to the SPX, having already taken out their early August lows, hedging activity in an attempt to circumvent the European short selling ban, may have been the cause. For now, the FESX and FDAX have put in double bottoms and are forming bullish falling wedges, although the volume has been relatively low and liquidity relatively thin. The US. dollar meanwhile has sold off from it’s August highs, which may suggest that Euro-zone money that had previously sought safety in in the U.S., is being repatriated to Europe.
The main source of the world's fears these days has been found in the Euro-zone sovereign debt crisis, so it will be interesting to watch the European markets next week, for further signs of real strength. It just may be that the European market "got ahead" of itself due to the hedge activity, and the market is now being run up to shake the weak shorts, trap some new longs, and add to existing shorts.
In either case, I’m sure the domestic bears will have their eyes fixed on the PIIGS.
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