EURO PLEDGE BOOSTS EUROPEAN STOCKS -- U.S. STOCK INDEXES BOUNCE OFF MOVING AVERAGE LINES
EURO GAPS HIGHER... A pledge from the ECB president to boost the Euro has caused a strong bid in that currency and European stocks. Chart 1 shows the Europe 350 iShares (IEV) gapping nearly 4% today on the news. That strong bounce has reversed the short-term damage done earlier in the week. Problem is we've seen these promises before and the resulting bullish euphoria has usually been short-lived. Even with that caveat, global stocks are having a strong day.
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Chart 1
U.S. STOCK INDEXES BOUNCE OFF SUPPORT... U.S. stock indexes are following Europe higher. Chart 2 shows the Dow Industrials bouncing off its 200-day moving average. Chart 3 shows the S&P 500 bouncing off its 50-day line. The Nasdaq market is lagging behind. Chart 4 shows the Nasdaq Composite experiencing a much smaller upmove. All three indexes need to clear their July highs to restore their short-term uptrend. Bond yields are bouncing along with stocks. A weaker dollar is also giving a boost to commodity prices. We'll take another look at the various markets at week's end and try to put today's initial reactions into a proper perspective.
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Chart 2
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Chart 3
