For the time being, fund managers can keep hoping that the combination of the Fed’s generosity and the ECB’s outright fear of financial panic in the EZ will allow traders to muddle through as they often do.
The yield on the five-year Treasury note may see a retreat in the near term based on safe haven buying amidst the woes of the Eurozone and sovereign debts of Club Med, but the technical formation is beginning to resemble a pattern which can often precede upward breakouts.
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.
Statistics are revealing that there are not only signs of life in key economic data, but the release of inflation data in China, India, even the EU and UK on Tuesday morning are getting a little too hot for comfort.
There are not many individual equities that Clive Corcoran would be considering on the short side, but the chart for ERES looks vulnerable to further selling.
No matter how dubious the reasoning behind monetary policy, the smartest posture for the trader is to align oneself with the primary dynamic that is moving prices.
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