Monday, February 4, 2008

S&P (stocks)... pricing growth or ...merely dead-cat bounce?


Big day for stock market today - in the REAL session, i.e 15.30 CET 22.00 CET - Why?

Technically this is 4th wave bounce - and major resistance @ 1400 which we are almost trading in time of writing - break wud invalidate count - and more to the point there
is growing belief Bernanke has done enough to restart US economy plus the added fiscal stimulus from Congress -- it cud mean a few more days of rallying... I remain as always sceptical, but remain long some March 1410 calls - Which I have had for a while, but.....

IF market is turning we need CLEAR confirmation in 10 and 30y yield in the US, despite rebound in US stock market 30y and 10y remain elevated in price - barely moving, this despite stronger 1y fwd yield.... so either... Fixed Income is too negative or the usual stock momentum will carry us higher.

The numbers on Friday was a disaster no less, no more, but for now market seems to keen to play recoupling ( vs Europe and rest of world)

BOE will cut 50 bps
ECB will be unchanged this week
Monoline bail-out will most likely run into some "issues" as market improves
There will be negative returns for hedge funds again in January........

Nice day

Steen

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