Risk on day, with stocks pulling through with the countertrend rally from oversold levels we've all been waiting on. I personally think the high is in for the stock market. No sign of divergence from the momentum indicators. Both the MACD and RSI are at the lowest levels since last July. There will be a terrific shorting opportunity when this bounce wears itself out.
 |
| Russell 2000 Index Daily |
Risk appetite has also found its way into the Euro, despite all the problems going on there. The ECB is desperate to push through a Greek bailout, but only if it won't trigger a credit event. That is a significant hurdle to cross, as it basically means new investors need to be found for the lowest rated sovereign bond in the world or current creditors need to voluntarily accept an extension. Does this remind anyone of when regulators were trying to find a buyer for Lehman? From a technical perspective, the Euro looks like a good sell at 1.45.
 |
| EUR/USD Hourly |
The bond market ain't buying this. Greek, Portuguese, and Irish bonds are all trading at all-time lows.
 |
| PIIGS CDS Composite Index (Bloomberg) |
The most interesting bond chart is the Spanish 10 year note. It's been coiling in a triangle for six months now, looking very much like a break to the upside is coming.
 |
| Spain 10 year bond yields |
