We do not rationalize why. We are of the belief that it’s not the news. It’s how the market reacts to the news. But since it is news, here is what is happening to cause the markets to jack to the upside this morning.
The supposed pro EU, pro immigration “centrist” in France will now be in a runoff with the anti-immigration, anti-EU “extremist!” Since the centrist is 20 points ahead in the polls with a May 7th runoff, the chalk is an easy win. A win basically takes a “FREXIT” off the table as well as the potential for an EU disintegration in which the “extremist” wanted. This has caused European assets to go topside which in turn is causing the rest of the world to gap up a little over 1% this morning.
On top of this news, do not forget that recently, we have seen plunging oil prices, mortgage rates back under 4% and this Wednesday, a tax reform proposal…all potentially bullish stuff.
Is 1% important? In our work, could be.
We say this because the Nasdaq/Ndx will break to new highs off the gap. Technically, very strong.
Other major indices will show strong support off the lows and back above moving averages…which in turn positions them to move out also. Remember, the 9 week pullback for the indices has been shallow though some areas have been hit harder.
So that be the deal…a chance for a 9 week topside move of world assets. Of course, recently, all strong opens have been sold into. It is a long day. But at the open, strong stuff out of the box.