Market rally is ‘major bull trap,’ analyst says
Stock investors are whistling past the euro-zone graveyard, pushing U.S. markets higher even as the economic headlines from Europe become more ghoulish.
The U.S. markets’ rally Tuesday was impressive, with all major indices adding more than 1%. But the gains didn’t impress Christopher Vecchio, currency analyst at DailyFX, who said a “major bull trap” is forming.
“The rally is a wolf in sheep’s clothing,” Vecchio said in a research note late Tuesday.
Pressures on global financial markets are too intense to sustain U.S. stock bulls, Vecchio added. As evidence, he noted the failure of the euro to rally beyond its pre-Spanish bailout level, along with low trading volume and “exceptionally fragile” investor sentiment ahead of what he expects will be “tumultous” elections in Greece this weekend.
Said Vecchio: “Without more stimuli coming from the major central banks — the Federal Reserve or the European Central Bank — in the near-future, it will take just a few gusts of negativity to derail the recent bull run.”
– Jonathan Burton