Good Morning Traders....
So is this the correction that we have been looking for all year? It is probably a bit early to call in my opinion but the increase in volatility over the last few days would suggest that we are likely to see big swings in the market over the coming weeks. The massive move in the $VIX would suggest that market participants level of fear has increased significantly over the few days all off the back of the Italian election disaster. As a trader one must always be aware of the level of complacency that can enter the global markets especially when all asset classes are making new highs and the backbone fundamentals remain weak, because there is always a chance that the mood can turn 'Sour' in a few minutes.
All eyes will be on Italy again today as EU leaders continue to pile pressure on Italy's parties to form a unity government, Moody's also released a statement saying that Italy's credit rating was at risk and we also saw market chatter yesterday of a 'Short Selling' ban on the Italian stock market as some of the countries big banks have come under extensive pressure since the election saga began to unfold. Traders and investors will be keeping a look our for the Italian bond auction that takes place at 10am in which Italy hopes to sell 4bn worth of 10 year bonds. (Good Luck with that).
Again we have important news from Germany and the EU as consumer confidence data will be released which is expected to show another rise for the second time this year. Across the pond we will be seeing Mr Bernanke testify to the House Financial Services Committee, this will more than likely dominate the US session and he is looking to come under more pressure then he did yesterday as he continues to defend his asset purchase decisions.
In terms of the FX market and other asset classes futures markets would suggest a move higher this morning, but I would take this only as an early indication and not a headlining indicator, mood can change very quick and there is a busy schedule on the cards today. Some of the markets look relatively cheap at the moment but with such uncertainty, I would be keeping my eye on the $VIX and shorting and rallies unless we see a significant move to the upside and previous levels of support can enter the frame again.

Happy Trading
@LowKeyCapital