Il Primo Ministro greco Lucas Papademos riceve l'approvazione del governo su tagli al bilancio che corrispondono al 7% del Pil nei prossimi tre anni e su una ristrutturazione finalizzata a ridurre di €100 mld gli oltre €200 mld di debito detenuto dai creditori privati, atteso il voto del parlamento • Standard & Poor's declassa il merito creditizio di 34 banche italiane tra cui UniCredit a BBB+ da A, Intesa Sanpaolo a BBB+ da A e Banca Monte dei Paschi di Siena a BBB da BBB+, S&P anticipa "una redditività decisamente debole per le banche italiane nei prossimi anni" • La produzione industriale italiana aumenta a dicembre +1,4% da novembre +0,3%, oltre le stime degli economisti +0,5%, anche se i dati del quarto trimestre -2,1% suggeriscono che la terza economia della zona euro è entrata nella seconda recessione dal 2009 • I Btp decennali salgono per la quinta settimana consecutiva, il periodo di recupero più lungo in oltre cinque anni, la prossima settimana il Tesoro vende €4 mld di buoni al 6% con scadenza 2014 • L'euro cala dal massimo di due mesi contro il dollaro, il mercato azionario europeo cala dal massimo di sei settimane e l'azionario Usa registra la prima settimana di perdite del 2012 dopo che i ministri delle finanze europee non hanno concesso il pacchetto di aiuto necessario a prevenire il collasso economico della Grecia

sabato 18 febbraio 2012

Market Comment - February 17

(Marco Bonelli) The sentiment game still works and extreme opposites further support the game and the market!

Bullish and bearish forces are battling and although the bullish camp gets more and more crowded, the shift in overall sentiment happened just a couple of weeks ago and investors are probably just in the middle of the process of shifting to a more bullish portfolio - the opposites of new-found bullish sentiment regarding the outlook for the stock-market and remaining traces of cautious sentiment, defensive investments on the one hand but also cautious contrarian calls on the other hand!

Market calls range from rally-on to imminent correction, the expectation range for the Dow Jones widened dramatically and goes from 16000 for the bulls (year-end target by the way) to 10000 for the bears. While a short-term pull-back is probably the most crowded call these days, but at the same time, everybody watches the psychological 13000 mark in the Dow Jones and 1363.61 in the SPX, the closing high from last year as crucial upside targets - the opposites of sell-the-strength versus buy-the-dips calls!

The major averages flip from signs indicating a sell-off (Wednesday's market) to break-out to new highs (yesterday's market), breaking support levels to the down-side on one day and breaking resistance levels to the upside the next day - the opposites of ongoing rally and short-term correction!

News and data still support the favorable fundamental scenario and while the market pays attention to disappointing events that point to a different fundamental outlook, only to brush it away on second look - the opposites of fundamental expectations and fundamental reality!

The silly rumor game is back on and the current subject, Greece, gets treated as if it's a make or break outcome for the world economy if Greece gets its second bail-out package. Each comment, each meeting, each telephone call and each step gets examined and interpreted - the opposites of believing in the success of a small-picture versus a big picture assessment!

With many forces still supporting the positive scenario the market rides for two months now, it's naive to expect one top and a straight correction after the major rally we have seen and are still enjoying. Nevertheless, I believe that stocks have entered a transformation phase that features pullbacks and rebounds, maybe over the next few weeks. While there will be frequent signs of the broadly expected short-term correction, positive headlines still get rewarded and confirm all those who call for the continuation of the rally and force everybody who remained cautious to jump on the wagon. The higher the market rises in this process the higher the risk grows once investors realize that the scenario they bought into turns out different than fundamental reality looks like!

Two final thoughts: Once everybody talks about certain chart-levels as a target and the risk-on rally is still rolling, these targets are rarely the end of the game but get easily beaten. In other words, if the SPX breaks above 1363.61, it will probably only be a question of time when it hits 1400. At the same time, I somehow can't get rid of the thought that the recent excitement around a debt deal with Greece will turn out to be a classic buy-the-rumor-sell-the-news scenario. It's February expiration day for options and how the market closes this afternoon might determine how the final agreement with Greece gets treated next week. Either way, reducing exposure and selling any strength might turn out to be the right strategy ahead of a possible correction that might last a lot longer than market participants expect.

Trade well and have a nice long weekend!

(Marco Bonelli is the Managing Director of International for CL King & Associates in New York. The opinions expressed are his own.)

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