Technicals Are Driving The Boat If Fundies Don't Interfere
Today, the market looked into the abyss yet again overnight, with the S&P mini trading in the 1120s. However, by the US regular trading hours, every lunge lower was parried away, and technicals starting taking over as the downward channels held and bounced.
Ludicrous Rumour Triggers Follow-Through
After meandering, there was a blurb in the FT that Italy was reaching out to China. Where there are a few problems with that. First, the Chinese have said aloud that they wouldn't if the ECB wasn't. Actually, that isn't that convincing either, since the ECB is buying Italian bonds. However, second, you need to ask yourself: why would the Chinese sink more of their foreign reserves in Euro-denominated Italian bonds when it has loudly criticized the U.S. and its budget difficulties? Does this make any sense whatsoever? As as a wise man once said, "Just because we don't understand Mandarin doesn't make the Chinese stupid." We attach all sorts of illogic simply because we don't understand the Chinese, their culture, their customs, or pretty much anything else either. We simply shrug our shoulders and attribute any 'ole reason to the Chinese. Inane.
Next Up: 10B Eur of Italian Bonds for Sale
Now THIS bears watching. Given that the main buyers of Euro-denominated bonds are European banks, which are riddled with Greek issues, and proposed regulatory restraints, the question must be: who exactly will be buying these bonds? That, we will see soon enough.
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