The ECB announced on Monday that in the event of the Italy referendum failing this weekend, that they would be ready to keep things stable with increased bond purchases. So the market has been sanguine about this all week. We haven't seen the march into hedges like VIX calls and volatility ETFs that preceded the Brexit vote.
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the Fred Beckey |
A "no" vote on the referendum essentially is the true beginning of the end of the EU, so I suspect that the reaction will not be so muted. Of course, we don't want to see a lock-limit down on the overnight /ES Sunday, but a 30-handle gap open to the 2161 area of SPX would work nicely. We would then sell off the entire week, eventually reaching an interim low at the December FOMC, for a couple of weeks of Santa rally.
But the larger goal for the next couple of months is to cross the big pink megaphone, then bounce into Spring with a phi retrace and backtest of the old rally channel.
Since the Donald won't be using the legacy media during his reign, I have added a free plug-in for his Twitter feed down the left panel. A couple of ads are tacked onto the block, the impressions of which benefit the authors of the plug-in and not this blog.
I still can't believe that the financial press has advanced the idea that Trump spending will be inflationary. If anything, you could start with the idea that they are taking a fiscal instead of a monetary route in all of this. But the results will be the same, inescapable debt-deflation and an eventual spiral. Globalism was the last act in a grand effort to expand credit, by exporting inflation throughout the world. There is simply no easy or safe way to dismantle what we have built here.
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SPX 12-03 |