logo
  Join        Login             Stock Quote

Preliminary Verdict: Consolidation And Correction

 February 22, 2012 12:44 PM


In my last post, I wrote that I was watching the European bourses and the Hang Seng Index for signs of whether we are likely to see a continuation of the bull move or a consolidation period.

The preliminary verdict is consolidation and correction. You can tell the short-term tone of the market by how it reacts to news. On the weekend, China unexpected cut reserve requirements by 50 bp. The Shanghai Composite rallied on the news, but the Hong Kong market was unable to hold its gains and finished the last few days beneath a key technical resistance level.


In Europe, we saw the Greek bailout deal finalized late in the night. Markets staged a mild rally on the news and then sold off. The Dow rallied to kiss the 13K level and wound up roughly flat on the day. Does this sound like a market where the bulls are in control or does it sound like they're exhausted?

In the wake of the easing of financial tensions in the eurozone, can anyone explain to me why the EURCHF exchange rate hasn't rallied and appears to be slowly declining to the 1.20 level where the SNB said it would defend?


The Swiss Franc has long been regarded as a safe haven and the EURCHF rate is a measure of risk appetite so the above chart appears to be anomalous. What does the FX market know that the equity markets don't know?

I generally agree with Barry Ritholz's scenario for the market, though I believe that the Fed is likely to be proactive on QE3:
If the past is prologue (and that cannot be relied upon), we could see a scenario something like this (Note: Wild ass guessing to follow). Markets kiss 13,000, pullback and consolidate.

Next Page >>12
iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageThe Phases of an Investment Idea

Now, before an idea is discovered, the economics behind the idea still exist, but the returns happen in a read on...

article imageLongest SPX Peak to Trough Pullback Since 2012

I have been quiet in this space as of late, but there is nothing like a 34% one-day spike in the VIX to read on...

article imageSP500 Continues to Respect the Range… For Now

With fears increasing that “all may not go well” with Greece over the weekend, markets dropped and gapped read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

The World's Top Irreplaceable Companies
More Articles on: Finance



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.