"German Finance Minister Wolfgang Schaeuble on Sunday rejected pressure to beef up the euro zone's permanent rescue facility, saying Berlin would stick to the agreement made in December for a lending capacity of 500 billion euros ($646 billion). "We are sticking to what was agreed in December," Schaeuble told public broadcaster ARD. "In March we will check whether that is sufficient."
Notice the key word in the news release is "lending capacity". This is not a gift, its a LOAN, on top of the LOANS that can not be paid back already. The world has gone fing mad.
Looking at the DAX we can see a clear bear DOJI set up right at the calculated R2 line. This is backed up by the negative divergence in the %B indicator. Notice RSI<2> has rolled over as well.
Conclusion: This is a tail that wags the dog situation, the USA being the dog. The DAX technically is at a point of at least short term potential reversion; that coincides with this week being a potential price and time turning point for a top. Expect the dog to be wagged by the tail should a free fall in Europe commence.
It's clear that Europe will deffer to the US Fed to hang Europe's debts on the US Taxpayer, since we have the worlds reserve currency and can monetize like theres no tomorrow. The problem is a declining tax base in the US, along with food and fuel inflation, causes money printing to produce negative returns on economies world wide.
The natural order of markets and economics will prevail, its a question of when? US traders and bond funds are convinced the FED on Tuesday will begin pumping cash into the system; it seems Germany is in agreement.
Clearly stocks have already priced in this potential Fed action; the jury is out as to what the reaction by markets will be, since everyone is all in already.
Tim Kathlina
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