Granted there is still a few hours of trading in Hong Kong but the Hang Seng is confirming the moves in the U.S. and Europe, up 9 percent in just a little less than 1 1/2 trading sessions. The S&P is up a stunning 90 points or 8.3 percent from its low on Tuesday. Given a decent U.S. job numbers and no tape bombs on Friday the Shanghai should have a nice catch-up rally when it reopens next week.
The world was ending earlier this week. Have the fundamentals changed that much or was the fast money just too negative and short? Remember, bulls eat, bears eat, and PIIGS get bailed out or take orderly haircuts as their bank creditors get recapitalized.
At least that’s the hope of this snap back. The Eurocrats have recognized the problem and now need to deliver a plan that won’t damage the core countries’ sovereign credit ratings.
We like rallies and we like our parachute. So we’re keeping one hand on the ripcord as the S&P500 – the global equity and risk proxy – approaches the red zone.
(click here if chart is not observable)