Every time I think about posting I promise myself to focus on being "concise", and, I admit, every time I fail. The markets always offer up news that needs to be interpreted, and each new event demands to be encapsulated within a theoretical framework. Anyhow, without further disclaimers:
This is the last week in February, and it's hardly started, but does anyone remember the positive market sentiment that marked the first week this month? I suppose that we should all become chartists and technical analysts and rise above the grimy world of headlines - leaving the world of sentiment driven investing to the masses, but, apart from attaining a Zen like state of mind, would it serve us better than striving to develop a robust theoretical framework based on fundamentals?
In the midst of the current market chop, it would be great to give some space to competing market analyses, and I would especially welcome commentary by advocates of technical analysis. Right now, US Treasuries are trading up while oil is down - which makes perfect sense since the IMF just managed to convince everyone, again, that it's in a muddle when it comes to sorting out some type of effective European stability fund. But, from a macro perspective this is not news, IMF inaction is a "given", what's important, for the Euro area, is greater stability on the back of existing pledges coming online via the ECB this summer. From a global macro perspective, sell the Treasuries on spikes and buy oil on dips - what do the chartists dictate?
Current weakness in European equity markets fits the global macro view, so today's action makes senses, but what about the lower futures for the US markets? Current US taxation legislation proposed by Obama has given participants cause for concern. The US is the home of many competitive, truly international companies (not just outsourcing one-trick-ponies like Apple), whose prospects would suffer if current double taxation provisions were changed (one day the media will wake up to the fact that this is what the recent discussions are actually about). It is almost certain that market participants will lose focus and forget about the importance of such proposed taxation changes, so, for the short/medium term - buy the dip! Unless, of course your charts tell you otherwise.
To conclude, feel free to throw some technical trading interpretations into the comments section - or make your own post!
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