DJ EuroStoxx50 Futures Volatility Forecast (07/11/2010)

The volatility was about to increase because it went from 0.6% to 1% and indeed the DJ EuroStoxx Futures dropped a few points. However, the very last part of the TGARCH volatility plot shows the impact that the QE2 programme had on the market.

The volatility decreased sharply in a matter of a few days and the chart is now displaying a downward sloping curve but the question that all investors are asking themselves is: WHAT IS GOING TO HAPPEN ONCE THE QE2 EFFECT WILL BE OVER?

Almost all the equity markets are showing prices that are not really justified by solid fundamentals and the DJ EuroStoxx is not an exception.

We remain bearish and the market is likely retrace soon. Also, we think that without  the Fed intervention we would be probably talking about the beginning of a new bear market.

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