IIFT Daily Note with Peter Brown

US and Europe continue to diverge

Posted by:  |  Time: 7:56 am  |  Topic:
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There are two markets here. The S&P is very solid for the reasons we have discussed. There is nothing to be gained from playing any downside moves. At all times look for levles to buy. This pattern should be good for the year. Today a pullback to 1500 would be great but we may only get 1506. The market is taking a bit of a rest but should make new year highs soon.

Europe is more difficult. Things are bad and equity markets are vunerable. The Euro however is a complicated story. It should be lower but the ECB is the only major Central Bank not engaged in quantitative easing, therefore if all other currencies are being sold the counter weight is likely to be the Euro. Despite a strong Euro being bad for growth, there is little that can be done about it unless the ECB change tack. Some chance of that happening.

So the Euro is a buy on dips, amazingly. 1.3560  1.3500  support  1.3600/1.3620  topside.

Those watching the IBEX will have learned yesterday just what this contract is capable of. A 200 point straight line rally. Not for the faint-hearted. However small startegic shorts can be very profitable. If it starts to go this morning it could be worth a sell.

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