It looks now that this pullback is gathering some steam. The DOW dropped over 200 points yesterday, as the world bank lowered its global economic growth forecast. Bunds rallied as long end was in demand.
Da ja vue for Euribor spreads as they continue upwards again, as red month and green months take their cue to march upwards. Dec10-Mar11 trading 27.5 after trading 26.5 in the morning, Mar11-Jun11 spreads are trading 28s after trading 26.5s yesterday and 23s last week! I have found it tough to go long these spreads but going short is dangerous too, so butterfly spreads continue to be my strategy of choice.
On the stock front the S&P 500, at 897, is six points off its 2008 close of 903. The Dow, for its part, is off 400. It had briefly stuck its nose above water a couple of weeks ago, but has been sliding.
Oil, down 3$ a barrel, sticks out like a sore thumb today, since presumably it offers a pretty spot-on read of investor sentiment about the real economy. Gold is also around $900, tracking the S&P perfectly.
Target for the S&P 500 is still 849.50, however futures today are pointing up as of now as strength in Europe is pushing this market higher.
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