Yesterday was a tumultuous day for capital markets and much of the focus was on the deterioration in the standing of the Eurozone finance ministers as credible custodians of the single currency.

We were all reminded that the Eurozone is really nothing more than a "currency club" in which the member states have to agree unanimously on most major issues.

Yesterday saw the Finnish government pushing back on a package for Ireland and, it has now been confirmed this morning, the Austrian government has withdrawn support for further bailout monies for Greece because of their serial mis-statements (to put it politely) of the extent of their budget deficit.

Meanwhile global equities are taking it on the chin as asset allocators are reining back on their previous appetite for risk assets with emerging market equities and debts suddenly looking a lot less attractive than they did just two weeks ago.

The Nasdaq 100 index seems likely to find support at the 2060 level as illustrated on the daily chart below.



EUR/USD has seen some short covering during European trading on Wednesday morning but the $1.3350 level indicated on the daily chart looks to be a likely target for testing in coming sessions.



CMF, the exchange traded fund which tracks California’s municipal debt, and which was discussed in Monday’s column shows that, while the headlines may be more about the woes within the EZ, there are serious issues for credit markets with US municipal debt as well.



Having been early on my short recommendation for PCY, the exchange traded fund which tracks the sovereign debt from emerging markets, the prognosis for a meaningful correction has now been validated.

 

Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market.