Not a good day of trading for people with heart problems. Yesterday's session was once again loaded with rumors, denial and panic. But this time Wall Street took a break, wiped the sweat from its brow and directed three European stock markets to gains of 2, 8 and 4%.
But this rebound didn't leave them out and made a special impact on Spain and Italy, because even though experts agree that the punishment levied on the stock markets is out of proportion with the current economic reality, they also assure that the price increases are not trustworthy. In other words, that we are dealing with what is known as a "dead cat bounce."
Yesterday was nothing strange, or at least that is what analysts are saying. The rebound in the stock markets was something they were looking for after three important drops during the past week. Still, they do not believe that it can continue. "There are no indicators that bearish sentiment is going to reverse because there is so much risk aversion and the the drops were flooded with such high volume," said Soledad Pellón, a market strategist from IG Markets. Joan Cabrero, an analyst with Agora Asesores Financieros, said "the rebound is very vulnerable, and it would be advantageous to close positions."
These suspicions are supported in the anxiety that was seen yesterday for the umpteenth time, given that volatility terrorized the markets again, with exorbitant collapses followed by strong rebounds later on.
History repeated itself yesterday, yet the ending was rather different. European markets started off, as we are seeing habitually, with rebound intentions that were losing strength thanks to new rumors centered on France. That said, the final sprint came with Wall Street. The Italian Ftse Mib and Spain's Ibex 35 (the only two countries included in the PIIGS who have not endured an intervention yet) took advantage of the brief respite from being the biggest losers in the markets. The Italian stock market registered a 4.1% gain, the biggest since May of 2010.
