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For those that were cheering for central bank intervention as a way to buoy global equity prices, the last few days have rewarded them.  On Wednesday of last week, the major central banks made a joint announcement that they had agreed to lower interest rates on dollar swaps. Since Wednesday, the SP500 is up +4.7%.

With the announcement of intervention behind us, the key focus will be the pin action in Europe this week and there are a number of key calenedar events to keep front and center:

1. Geithner arrives in Frankfurt tomorrow

2. ECB interest rate announcement on Thursday

3. EU meeting on Friday

Both equity markets and even bond markets in Europe are presupposing a solution to come in the next couple of days.  Rumors are rampant as to the size ($1 trillion? $2 trillion?) and nature (ECB backed? IMF backed?), but one thing is for sure, if clarity doesn't come this week, then it is unlikely that equity rally will be sustained through year-end.

The SP500 remains below both our TRADE and TAIL lines of resistance at 1,259 and 1,270, respectively.

Daryl G. Jones

Director of Research

European Pin Action: SP500 Levels, Refreshed - SPX