Euro-reka! ~ The Risk Averse Alert

Tuesday, May 01, 2012


Euro-reka! One way to forestall the euro-zone's implosion is more continent-wide holidays! (Today was Labor Day in Europe. Their markets were closed.) Each could be a day of reprieve for insurers and leveraged speculators desperate for a one-way trade this side of the Atlantic. The rise of socialists could be well-timed on this account.

Of course, it is all too easy to slip away and dream in the spirit of these past few years. Europe's deafening call for "growth" must come at a cost, and it is one the trans-Atlantic banking system simply cannot bear: rising rates. So, June 30th expiration of the Fed's "Operation Twist" meets a fast-moving, anti-austerity current and a financial system whose leverage absolutely, positively must increase. Hmmm. I wonder where this is going. As did others this afternoon...

SPX 5-min

Now that is just pathetic. Relative strength today is a picture of exhaustion. Mark it down.

Five waves up from last Monday's bottom appear to have completed this morning. And in the process the Dow Industrials eclipsed its April 1st high. So, there now is a stronger case to suppose the market might maintain its levitation a few weeks more. Yet the manner in which the market's longstanding underlying technical weaknesses could put a lid on any remaining upside appears a prospect further supported by today's exhaustion.

Fast Money
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