07.56 The Spanish banking bailout does not solve Europe's fundamental problems, nor even Spain's, for that matter.
Years of difficult economic reform lie ahead and there is ample scope for further upsets along the way. Here and now, though, this move should be enough to keep European equities rallying. The combination of still fairly beaten-up indices and the psychological boost of knowing that near-term disaster in the Spanish banking sector has probably been averted is a recipe for more gains.
With the DAX and FTSE back above certain key levels, I am turning mildly bullish once more. I would frankly prefer to be long of the US indices, which are in much better shape overall. I remain bearish on the outlook for the single currency, however.
Click here for analysis of some leading European markets.
09.52 Any recovery in the Euro resulting from the Spanish banking bailout will probably be fairly temporary. Indeed, I think the single currency could come under further pressure this week as the Greek poll looms on Sunday, not to mention thereafter. One way or another, the Euro needs to weaken if it is to survive. In this environment, more downside in the commodity complex is almost inevitable. The overnight gains in basic materials do not look convincing to me and I remain on guard for shorting opportunities.
Click here for analysis of some leading commodities.
**Dominic will be presenting at the London Investor Seminar on 18 June - book your place today.**
12.03 I remain better disposed towards the US indices than to their European counterparts following the Spanish bailout. The S&P, Dow and Nasdaq all managed to stay above certain key levels on Friday and have since rallied decently once more. While the overall direction remains downwards for now, I am willing to give the present move higher the benefit of the doubt. If the indices only pull back gently from their overnight highs, I will try and catch the next rally.
Click here for analysis of the US indices.
MORE FROM DOMINIC PICARDA...
Dominic Picarda is a Chartered Market Technician and has co-ordinated the IC's trading coverage since 2006. He is a regular speaker at trading and investment events and also holds the Chartered Financial Analyst qualification.