IIFT Daily Note with Peter Brown

Pivotal day ahead

Posted by:  |  Time: 7:32 am  |  Topic:
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Market put in a good recovery yesterday, S&P reaching a 1658 high in the end. Today we have to see if we follow through or reverse. In this respect it could be a critical day in setting the mood for the next few weeks.

I think the tapering story has just about run it’s course. The market knows it will start at some stage and take a long time to inact. So there will not be a sudden turning off of the QE tap. We can move on I think.

The two big stories set to dominate are bond rates and emerging market turmoil. If we head towards 3.00% on the ten year the stocks will fall (about 100 points on the Dow for every .10% move). And if the emerging markets continue to decline stocks will fall. So we may get some follow through buying today but the mood is unlikely to turn medium term bullish. We will be selling on rallies soon. Just need to establish where this rally will end.

Tech Levels today are  S&P  1660  1650  Euro 1.3440   1.3320/00

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