The Swiss team confirm the near term capitulation that we saw last week. They expect a bounce here lasting between 5 and 10 sessions. They recommend selling strength with S&P 1250 and even 1210 as cyclical targets.
Its hard to disagree with their analysis on this occassion. Greek elections marked for the 17th June and the FOMC meet for two days on the 19th and 20th of June. Very conviniently the G20 meet also on the 18th and 19th of June 2012 in Mexico. ECB meet 20th June. Bank of England meet 22nd of June. If we turn back to 2009 the market bottoms did not co-incide with central bank monetary policy announcements. The bottom came well after the news as the market had momentum to the downside. If we see renewed downside momentum following this ‘bounce’ low could occur easily extend through the summer. Its worth remembering this bit of recent history before ‘leaping’ on news flow ahead of the technicals turning. Of course, assuming policy makers do act in June. Lastly, on a similar issue, the fund flow implications of their call for the top in the decade long bull run for the bunds is meaningful if correct and has serious positive fund flow implications, especially for equities.
All the best
Rich
(9 votes, average: 5.00 out of 5)
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