Good Morning Traders
Its looks as though the weather we are experiencing over here in Ireland is similar to the mood amongst European investors. We start the day off in the usual negative territory, something we have become accustomed to over the last few weeks. As the old saying goes when it rains its pours and we have seen negative news multiply around the euro zone over the past couple of days. It started off with Cyprus, and the markets do not seem to happy with the deal that has been reached between the Cypriot Lawmakers and the ECB full details are to be disclosed during the course of the week. On top of this the Italian election has taken over the spotlight again and itr should dominate the headlines as the struggling nation is without a leading government. To add fuel to the fire there has been unconfirmed talk of an Italian downgrade which will come as no shock to investors, but it will undoubtedly compromise confidence within the euro zone.
All of this bad news flow has hit the Euro hard and the pair has come under increased pressure now trading down around the 1.28300 handle.
Over in the US things are very different the US equity market continues to grind higher disregarding all the poor euro zone economic data while it continues on its road higher, trying to breach the historic highs set back in 2007. The SPX is only 2 points off these levels and we expect to see this level breached this week.
We have been talking a lot recently for a market correction to take place, and we are standing by this idea, however it is going to take something a bit bigger than Cyprus to make this happen. It will be interesting to see what the SPX reaction will be when it makes its new high, this coupled with a potential Italian downgrade may be the catalyst we have been waiting for, however as we well know its a dangerous game to try pick a top and the last thing you want to do is stand in the way of the FED and Mr Bernanke, so wait for the set-up and trade your plan.
I would been more focused on the US equity market for the coming days buying any dips while keeping and eye out of the European markets.

@lowkeycapital