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And so the curtain is about to be drawn on a miserable week for most investors. As posted throughout this week it looks to us like there has been a margin washout and todays poor price action on Italian bond yield woes is really squeezing the last vestiges of patience out of the remaining market bulls. With the weekend beckoning it seems lots of punters are retreating to lick their wounds (and sink a few pints!) and flatten positions in case of more bad news out of Europe…

I believe we are building a base here for a new up-leg. The FTSE seems to be underperforming relative to other markets due to its high beta commodity weights. Continued volatility in the land of the Matador with price ranges of 5% in a day is typical of bottom probing and, as I have relayed for the past 2 weeks, I think barring complete economic armaggedon in the Eurozone that Spanish equities offer generational value here with the market yield in excess of 7%.

Hope it wasn’t too rough a week for you all. We’ll keep posting over the weekend!

UPDATE (1) – 1.15 print on the equity only Put:Call ratio – music to a (contrary) bulls ears. 5th print at that level in 8 days – if the floors not in I’m a chocolate teapot!

It strikes us that the market data is largely showing that there are more people playing the bearish trade as we discussed here last week than the potential bullish side. This implies the short trade is crowded and risky, and the long trade is less risky and more opportunistic.

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