The random number generator is out in full force again, this time spurred by China more or less correctly and more or less directly telling Europe to get its house in order. Think of it as a Valentines day follow-up:
Xiaomei: “Hey, Jurgen, I don’t want to break up with you, but I might have to if you break down. I would very much like your extended family to still buy my family’s stuff, but it’s not worth it if I have to pay for your shrink bill.”
Jurgen: “Yeah, I know, but I’m going through a rough period right now, my gay brother rival isn’t helping out much lately and might even go through a personality change, another one that moved out to an island is drenching himself in the heresy of debt just because he can get the money easily, and pretty much every smaller sibling is bickering and asking for pocket money for more candy.”
Xm: “Have you tried to stop beating them up or yelling at them?”
J: “Nah, can’t see the point with those brats, really. And we can all agree they’re morons anyway, they deserve it!”
Xm: “Hey, listen, your health is more important than that. How about this: you let them out to play tonight since they were stuck inside all weekend doing chores, and I’ll… provide a late Valentine’s treat? I might even slip them some candy once they come back if you manage to keep them in line without yelling at them.”
J: “I’ll think about it”.
It’s pretty much a statement that doesn’t really say anything, since China hasn’t committed to anything really, and what little they did commit to was dependent on Europe getting its house in order and provide lucrative investment and partnership opportunities.
Hang Seng closed up on the news, by a mere 450 points! (2.14%!) Volume at HK$82.3 bn (second highest since Dec. 1, but lower than the ~HK$90 bn ticked Wednesday last week) to climb over both the 20 960 level, the 252 SMA, resistance level and consolidation at around 21 000, and maintained the range expansion increasing volume trend, lending much much more credence to the sub-monthly momentum indicators.
The Nikkei is of course also sailing high on the continued rush from everyone realizing just what the BOJ inflation target actually means. It outperformed the Chinese peers today, which is not surprising given the valuation picture and the policy uplift, but still interesting since this relatively rarely happens.
While I will admit to not being particularly well positioned for this rally today (high beta stocks played using in-the-money derivatives) my plays still returned juicy money today and returned some of that actual implied volatility to the market after the latest short-term volatility-reducing consolidation. I guess I got a new lease on life. More importantly however, is whether this rally now gets followed up by the extension I expect or we get a full potential rally exhaustion of the HSI at 22 000 and 22 500 respectively. Momentum is definitely there since we finally got some real data backing bulls’ entries. Continued relief is the base case, but it’s really not important given tonight’s binary event. Still, quick roundup of what shook away from their shackles in Hong Kong will be given.
My hope is that you got plenty of good chocolate yesterday, because there will be some snacking to do in front of the screens tonight during the Greek bailout conference call!