Italian Prime Minister Mario Monti is facing signs that tax increases are beginning to backfire as his new levy on real estate goes into effect.
Italy’s borrowing costs surged at the sale of 6.5 billion euros ($8.2 billion) of Treasury bills after the 100 billion-euro bailout of Spain’s banking system failed to stop contagion from the region’s debt crisis.
Tax something and you get less of it. In this case, less means less revenues to the Italian government, which is why its borrowing cost will continue to increase until it gets assistance, just like Spain, just like the rest of them.
Not a day goes by now that I do not turn on my computers to check the futures and the overnight session and wonder what have the little rascals done now? Any day I expect to see another globally coordinated central bank intervention even bigger than the last.
Speaking of the overnight session, futures double topped and have come off since 4am EST. There are a couple ways this could impact today's S&P cash.
The targets are a 1:.618 leg at 1306.45. A 1:1 leg at 1295.41. And a 1:1.618 leg at 1277.55. Based on Fibonacci theory, the first two targets suggest a correction. The third one is an extension and suggests an impulse. So I'm a buyer of calls down to the 1295 area. After that I'd be concerned that something else is brewing that would call my expectation of higher prices being retested.
Notice also how price has stalled at the downsloping trend line and the 38% retracement level, but not before exceeding it. This is another reason why I feel it will retest higher to see if there are more sellers or buyers.
People in chat rooms love to whine about market makers jerking price around and manipulating every dip and rally. All it is is price discovery. People in chat rooms should chat less and trade more.
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