It looks like the market is starting off the week on a very strong note with a 1% gain in the S&P 500 Futures.  The reason being given in the financial press is that Italy is becoming more conciliatory in their rhetoric toward their budget once it was rejected by the rest of the Euro Zone.  We stated last Wednesday that Pain is motivator as retest plays out, and that looks to be the case right now in Italy as fears mount of yet another Italian credit crisis.

The reason we highlight this today is the two main catalysts needed to end the retest, and generate the next leg higher in equities are (1) perceived resolution of trade war with China, and (2) perceived change in global growth and monetary policy tightening as we enter 2019.  A resolution to the Italian budget crisis in the Euro Zone will help relieve some fear of economic crisis there.  Let’s see if the early market strength holds…

All market data points are from Bloomberg as of 11/26/18, and should not be relied upon as current thereafter.

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