IIFT Daily Note with Peter Brown

Euro worries and Profit taking

Posted by:  |  Time: 7:58 am  |  Topic:
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A serious sell off yesterday out of the blue. S&P and Gold got hammered while the Euro held in around the 200MA on the daily chart. The sell off was part caused by Spain and a profit take following the QE3 euphoria. Overall the market is now bearish and the effects of Draghi and Bernanke have diminished.

The move lower was far deeper than anticipated with the S&P hitting big support levels at 1425 and Gold dipping below 1740

The market has recovered overnight but the mood is likely to be nervous.

The market should have a bottom at yesterday’s levels, it is hard to see the S&P going into a long term bear market with interest rates at zero and QE. Gold was violent yesterday but is back up at 1760 today. The down move was far deeper than I expected and unexplained. Bad news from Spain should be supportive of Gold.

So going forward we may find support today, S&P still looks cheap as does Gold, Euro is capped at 1.2900 so it will be difficult to break above there.

Levels are 1425  1440 S&P  1740  1766 Gold 1.2830  1.2900 Euro

Wait for the mood and go with that.

 

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