ECB : signalling another strong rally?
​Yesterday's strong rally came as a surprise to us. We expected strength for the Dollar and for the Bund, but not from Equities. What is the impact of this signal? In the short-term, it looks like Equities can rise more. Yet, all indicators are overbought, and invalidation levels are distant. This definitely is not an immediate buy opportunity. As often after very strong moves, the following day can extend the momentum, but usually, a consolidation follows for several days. We will have more opportunities to make new short-term decisions later. In the medium term, we do not have signals yet that European stocks will out-perform European Bonds nor US Equities. Let's remind that the Dollar strength caps US equities, and the Euro weakness decreases international appetite for European investments... The ECB has not yet offered a real solution to the tough situation we face!
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