S&P500 cut through 1220 resistance level like a hot knife through butter. What you need to pay attention in coming week is 1228 resistance level. Please note 1228 is the most important resistance; bulls are going to have a hard time to break 1228. I'm looking for 5-10% pull back in comming days. If S&P500 gets above 1228 and big institutions manage to hold the S&P500 above it for a couple days, S&P500 could rally to 1300. S&P may run out of steam at 1253, but it is not as important as 1300 level. Therefore if S&P500 stays above 1228 I would say the rally should continue to 1300 with out any problem.
Ireland 10 year government bond chart:
The only event that has the potential to reverse the rally would be European sovereign debt crisis. I have talked about Ireland many times. Ireland government bond yield made a new high of 7.72% recently. Bond market is sending a clear signal to Ireland's president Mary McAleese, that we do not trust your economics policies.The cost of insuring Irish debt rose. Theoretically 7.72% yield means bond market does not have any faith in Patrick Honohan Governor of the Central Bank of Ireland. Ireland will be the next Greece, IMF has no other options beside bail them out. Portugal 10 year government bond yield made a new high of 6.655%. Portugal will be the next right after Ireland in bailout line.Credit-default swaps on Irish government debt surged 30 basis points to a record 590, according to data provider CMA. On Friday 11/05/2010 the spread (difference in yield), between Irish bonds and benchmark German bonds rose as much as 25 basis points to a new high of 534 basis points. As I explained previously Ireland economy with $172.5 billion GDP is too small to cause a systematic risk, but due to extreme overbought stock market condition the Wall Street could use anything as an excuse to sell.
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