Colin Cieszynski, market analyst with CMC Markets Canada, does a good job each day of explaining the inexplicable in the markets.
Wednesday’s markets have been stronger than expected after Moody’s Investors Service’s downgrade of French banks Société Générale and Crédit Agricole.
The selloff in stocks on Monday had priced in much deeper rating cuts than the one notch that Moody’s actually delivered, he says.
Signs Wednesday point to a possible buying opportunity for the shrewd trader, Mr. Cieszynski notes:
“The failure of markets to respond to bad news this morning suggests that recent selling pressure has been exhausted for now and that we could see some bargain hunting in the near term. As we have seen in energy markets though, the bulls may only be able to take markets so far while the global economy remains in a tenuous situation. While general uncertainty remains, we may see more reversals of fortune in the coming days and weeks which may continue to create opportunities for active traders.”