Despite the spike in volatility in currency markets in the back half of last week, both US and European equities held in well and bounced back on Friday.
There will likely be more widespread implications as far as ‘trust’ in central banks goes (as a result of the Swiss National Bank shocker of course). In the meanwhile, the major US equity indices are trading in a choppy fashion but are still holding their well-defined intermediate support lines.
The following remains my base case: The pickup in volatility we have seen in commodities and currencies since this past summer and autumn will be a key contributor to an eventual drop in stocks and further hike in volatility.
Read my full analysis here: