Post FOMC Selloff

We are getting the FOMC hangover selloff thanks to renewed worries in Europe, as Greek bond yields shoot up and Italian banks are getting sold heavily.  Everything is fine in the US, of course, it is just those PIIGS in Europe that are getting in the way.

It is amazing to see this US and European equity divergence just get bigger and bigger.  It is almost as if all the money devoted to equities is being hoarded into the S&P, at the expense of every other equity index in the world.  Eventually you would expect the US equities to get dragged down by the weakness abroad, but it isn't happening, except for a day here, a day there.

And Draghi's promises and actions still haven't satisfied the European investors.  Otherwise, you wouldn't be getting these big selloffs in Europe out of the blue, something you rarely see in the S&P.

S&P has nearly doubled in 5 years while the Eurostoxx 50 is up less than 10% over that time period.  It truly is remarkable how much the divergence is.  And most of the emerging markets are just as drastic a divergence.  It is the S&P 500 standing alone at the top, with very few able to follow.

The Fed surprised with the hawkish statement, and I was definitely surprised that they didn't mention any of the global growth weakness, but I guess they felt like S&P 500 had rallied enough and there was no need to use up bullets when S&P is almost at 2000.  I am only half kidding.  I would expect any selloff to be well supported around 1947 ES, or 1952 S&P.  Next week should be bullish for the market until at least Thursday.