As Mr. Market waits for the will-they-or-won't-they news on Greece, he is telling me that worrying about Greece is so...last year. Despite all of the angst about a possible Greek default, the Greek stock market has been rallying and outperforming the Euro STOXX 50 in the past few weeks.
Worries in the eurozone has shifted to Portugal, whose stocks have been dramatically underperforming.
All is not lost for the bulls. The Portuguese market is staging a tactical rally and testing its downtrend line.
In addition, Portuguese 2 year yields, which had spiked above 20%, are now in retreat, perhaps indicating that Mr. Market is anticipating further relief from the ECB's LTRO2 program.
That's why I am relatively sanguine about the risk trade. If this is the worst that Mr. Market is worried about, it's time to get long and stay long.
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