Now what? Another weekend came and went and another sit down with European leaders fell flat. The EU summit fell very short of investor expectations and futures are lower this morning. I don’t care how overcrowded the trade may be, my favorite short continues to be in the Euro. I am also looking at European banks and ETF’s to re-short as many have rallied off their lows in anticipation of a great outcome. $DB and $STD come to mind. Europe continues to be awesome at having meetings, but very bad at delivering a solution.
So, is our year end Santa rally in jeopardy as a result? No way have we decoupled from Europe’s problems and we probably won’t for a long time. Maybe the bulls can ignore it, we’ll see. I now refer to the 200 day moving average on the S&P as the “what will Europe do line”, as nothing else really seems to matter.
Unfortunately, watching bond auctions and headlines is our new normal and this exercise will probably be with us for a while. The upside to all this may just be a bid for stocks as everything else just looks toxic. Treasuries will be bought too. $TLT
Yields are rising in Europe again and the Italian 10 year is back up.
Tomorrow will be interesting as the Fed meets again and we see the November retail sales figures. This number will include black Friday sales figures.
The market could use some Tebow time right about now.
Good luck.