Thursday, 23 October 2014
Economist Cover Alert
We have just been treated to an indicator that out trumps any such voodoo as Hindenberg Events (Heisenberg Events are different and involve Breaking Bad), Golden crosses, moving averages or Fibonacci levels. This is the Ace of Spades in the pack of indicators. The mighty Economist Cover Alert.
The lull in the market battle that occurred around the 50% retracement level for US equities was brief and though it looked last night as though the fibonacci sellers were going to have their way with a rollover that was shaping up to dump again, it's now looking as though it was an ambush and the move back through this week's highs has followed through with a final bayonet charge that might carry all the way through to 2000 on SPX. I pity any poor soul who has just returned from a nice 10 day half-term break in the Maldives or such distant delight to be informed that they were stopped out 7% lower.
Of course that's just the US. The European markets have been languishing behind and that's why this Economist Cover alert is all the more interesting. Their full Europe story is here but though they paint a picture based on recent history, it is hard to see sentiment turn much more bearish on Europe without a real fracture in structure rather than just bond vigilante attacks. Today's European data (released after the Economist piece) was a pleasant surprise and falling on such abject pessimism may be enough to turn some marginal sellers into buyers.
Please don't think I'm a raging Euro bull. I am just of the belief that with sentiment placed where it is, a lift in RoW sentiment out of last week's disaster zone, the US breaking higher, a bit of better Euro data and an Economist Cover Alert, it's worth buying the 'worst of the worst' and they are anything that contain the words 'Growth' and 'Europe' in the same title.