News on the PIGS
Looking at the short term conditions of the market the S&P 500 touched the 200 day moving average at 1,100 to close at 1,115 after breaking another critical support of 1,120.
The next level of support may be the panic bottom on 6th May at 1,060.
There is so much uncertainty and fear in the markets the VIX rose back above 35 it’s in the extreme
high side of the FEAR sentiment out there.
The trillion dollar bailout for Europe hasn’t worked just yet it remains to be seen looking at Spain’s auction on Tuesday they failed short by $1.6 billion in sold bonds; they hoped to sell $8 billion but only sold $6.4 billion.
There are big demonstrations in the Greek unions today and the Spanish unions are also calling for a strike while Germany banned naked short selling on all equities and derivatives and are prohibiting investors from buying credit default swaps on sovereign debt unless they own the bonds. They also banned naked short selling on all the bank stocks.
The four PIGS need to raise 500 Billion Euros this year in new debt the possibility that Greece and other countries will default on their bonds as Germany refuses to put any more bailout money up.
Restructuring the debt the ECB and IMF will buy lots of bonds from European banks to spread the pain everyone else will take. The impact could be that the Euro falls below a dollar remember at one time the Euro was at 87c. If the sovereign debt of the PIGS gets impossible to sell and interest rates rise the ECB may have no choice but to do what the fed did in 2008 flood the banks with liquidity PRINT MONEY.
If the Euro falls so will the pound the yen will rise along with the US dollar and Gold.
Trader Lyn
