I am calling, what I think is the start of the year end rally, the "technocrat rally". The most damaging uncertainty was Italy. Like a parent disciplining his child, the markets slapped the Greek and Italian politicians into shape. As mentioned two days ago, "Italy doesn't need a bail out, it needs to pass it's reforms. Then the ECB can facilitate a reduction in short-term borrowing. And this month's crisis is averted."
Now that Italy acted, the ECB came in and took down rates, calming the markets. (Because of the austerity
The 1220-1226 level held up, and we should be testing the 1275 level soon enough. (I say 'should' because I have never seen so many consistent cutting-of-the-knees comments and actions from the EU, that inspired so much uncertainty where by markets fall 3-4%.)
The stability is obviously for the vast majority of stocks, across the board, as today showcases. The news, should benefit the financials. Now that Italian debt will not be written down, GS or MS should benefit.
Goldman looks interesting here. It looks to want to re-test the 110-115 by year end.
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