Pierre Bonart

Don’t fight the tape! If the credit crisis was to generalise to every part of the market, we should see it on the tape. So far, the markets turned around in mid-August and stopped going down despite the bad news. The hope of a Fed rescue probably helped. Nevertheless, a market that doesn’t go down on bad news is temporarily sold-out. The current message given by the market behaviour is mixed and confusing with a lack of momentum and market breadth in the rebound, consistent with the lack of visibility on the credit crisis. However, if the markets were to penetrate important levels on the downside (1406 on the S&P) this would call for a bearish view.”