Liams Last Post : Another day in the bear pits...Markets near oversold and testing key supports..

Good Afternoon,

 

Another day, another gazillion dollars or whatever written off global markets today.  

 

Markets are reacting negatively to Germany placing a ban on short selling of certain instruments but in reality it is a market reaction to the very obvious lack of unity amongst the Euro nations and the attempt by Germany which is supposed to be the lynchpin of the Euro project to protect its own interests.

The Euro currency is under enormous pressure with it touching a 4 year low vs the dollar.  The Euro/$ exchange rate is close to a key support level which is bound to be tested around the 1.21 level once the 1.23 level is broken. The Aussie Dollar also joins in the news with a big relative reversal vs the US$.

 

There is also much talk this afternoon about the Yen and about an unwinding of a yen related carry trade.

In terms of equities today has been yet another really tough day….but in terms of European sectors basic resources stocks were down -5% , Auto parts -4% , construction and materials -3.3%  . The beast performing sectors were also down Telcos -.6% and oil and gas -2%

Year to date positive performances have bee wiped out.. The Dow is down -13% , the Eurostoxx 600 index is -14% , the FTSE a strong relative performer -4%  with the PIIGS countries Portugal – 15%   , Italy -17% ,  and Ireland also a strong relative outperformer down -3.4% year to date.

In Ireland , Bank of Ireland Nil Paid rights started to trade today. Bank of Ireland has been a truly awful performer with the stock now down 45% from the high it hit just a few days after the successful firm placing of the Eur500m.  The underwriters who have underwritten the issue at 55c are within sight of their commitment price. The discount to Tangible NAV is now about 24% ….

Smurfit I have said for the past week is a key indicator of sentiment…the stock had been really resilient over the past few weeks but it finally cracked today to fall a further -6.5% . The stock is heading into oversold territory but like many stocks and markets is at the support levels now…

 

The Building materials stocks also took a tumble today with Grafton and Kingspan down -4% and CRH down -2%.

 

Even the food stocks like Kerry which should do relatively well in this environment fell -4% today  

 

 The ISEQ index now is very close to its support levels , it is approaching oversold though many stocks are already there. The Dow Jones index looks like it will test the 10000 level shortly and is also close to oversold territory.  The Eurostoxx 600 index is back testing the lows and the support level created in August of 2009.

 

Critical days for markets to hold these levels. With the rapidity of the moves and the fact that all are close to being oversold , maybe we might get a respite rally … who knows…The weekly closing levels will be crucial . Time again for the crackberries to get stuck into the closing action on Wall street this evening. The market is off the lows and has rallied into the European close but where it goes from here is anyone's guess…

 

Have a good evening..

 

Liam  

 

 

 

 

 

 

  

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

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