Ares
12th May 2010, 11:25 AM
By Nic Lenoir of ICAP
We brought up the other day the CAC index as one of the indices we would like to short on a rebound. Being French I can promise you first hand that if there is any form of austerity required as part of the $1Tr package it will not fly one bit by main street and we are likely to see some footage reminiscent of Athens last week. We had riots with a daily car burn rate above 1,200 for over a week because a teenager electrocuted himself trying to escape from the cops, so just try and imagine if railway workers can no longer retire at 50 or 55 after being driven to exhaustion watching a computer do their job 35 hours a week?
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/cac%20daily_1.gif"/>
Technically we are just below the 200-dma at 3,788, the former support line at 3,810 and the 61.8% retracement at 3,805. Selling between 3,780 and 3,820 would be ideal but with volatility being sold very aggressively it may be worth starting to load up some puts in case we don't get the kiss good-bye retesting of the former supports.
The devil's advocate could look at the IBEX and claim that we retraced 61.8% of the rally since March 2009, and are therefore looking at further acceleration to the upside. Personally last year's 100% rally in the face of insolvency of banks and the government, with unemployment above 20%, and industrial production off more than 25% since 2007, is a bit questionable in the first place. A look at the IBEX on a weekly chart since 1990 shows a very different picture... We think the risk reward to play the downside here is excellent and will only reconsider the recommendation if the CAC closes weekly or at least daily above the 200-dma.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/ibex%20daily.gif"/>
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/ibex%20weekly.gif"/>
Good luck trading.
http://www.zerohedge.com/article/time-load-european-equities-puts
We brought up the other day the CAC index as one of the indices we would like to short on a rebound. Being French I can promise you first hand that if there is any form of austerity required as part of the $1Tr package it will not fly one bit by main street and we are likely to see some footage reminiscent of Athens last week. We had riots with a daily car burn rate above 1,200 for over a week because a teenager electrocuted himself trying to escape from the cops, so just try and imagine if railway workers can no longer retire at 50 or 55 after being driven to exhaustion watching a computer do their job 35 hours a week?
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/cac%20daily_1.gif"/>
Technically we are just below the 200-dma at 3,788, the former support line at 3,810 and the 61.8% retracement at 3,805. Selling between 3,780 and 3,820 would be ideal but with volatility being sold very aggressively it may be worth starting to load up some puts in case we don't get the kiss good-bye retesting of the former supports.
The devil's advocate could look at the IBEX and claim that we retraced 61.8% of the rally since March 2009, and are therefore looking at further acceleration to the upside. Personally last year's 100% rally in the face of insolvency of banks and the government, with unemployment above 20%, and industrial production off more than 25% since 2007, is a bit questionable in the first place. A look at the IBEX on a weekly chart since 1990 shows a very different picture... We think the risk reward to play the downside here is excellent and will only reconsider the recommendation if the CAC closes weekly or at least daily above the 200-dma.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/ibex%20daily.gif"/>
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/summers/ibex%20weekly.gif"/>
Good luck trading.
http://www.zerohedge.com/article/time-load-european-equities-puts