I believe we are approaching a decent long trade. The market is becoming oversold and very strong seasonality starts this Friday. The reason it is only a decent opportunity is because sentiment is still not where I would like it to be, but there is still some time for that to change. There has definitely been an improvement in sentiment from a short week ago, but anecdotally it seems that most are still clinging to the bull camp.
It seems like we are seeing a repeat of last year as the EU ignores credit spreads blowing out, hoping that it will improve on its own. This too will be an impediment to a short term rally. I believe the logical thing to do would be for the ECB to buy Italian bonds. I understand that they likely want to wring out concessions from Spain before bailing them out but there is no reason to allow this to spread to other countries. Unfortunately, trying to apply logic to the reaction of EU authorities has been a fruitless endeavour until this point.