Since 1/19/2011, the CSFB has trended in an upper sideways range between 25 and 30. Given the three main moves in this channel, there is a high probability a new pattern wants to form (quite possibly a fall back to the lower channel in the 20 to 25 range observed between Jan 2010 and Jan 2011).
The TED Spread is not overly concerned. Banks feel there is heightened intra-lending concern, but nothing out of the ordinary for Greece's micro-debt crisis.
The Greece fire has been calmed, but premiums remain high and may trend higher as the US debt ceiling debate continues. Everyone has placed their bets on the two parliament votes, but there are three steps of acceptance: one vote to initiate the reform, a second vote for implementation of the reform, and finally the citizens {accepting the outcome, or voting out the powers that be, as is all the rage these days overseas.}
There is a high possibility for a positive debt ceiling outcome (raise the debt ceiling) to turn into a pessimistic market outcome as fear, uncertainty, and doom (FUD) can cast a shadow over the market. Reduce spending, increase taxes, and improve growth and employment will be key factors to balancing this budget.
In the meantime, the bullish rally this week reclaimed much of the June losses.
If we are at the top of a near term bear channel, this would justify the CSFB climbing to 30 again, and then collapsing back into the mid-20s, so premiums can ramp-up for US debt-ceiling vote in August.
Our President and Congress will take the debt ceiling vote to the Nth hour, since both parties feel very strongly about their own ways to bridge the gap. Let the political noise get louder, but don't let it distract you too long.
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