So, if the market was hoping for a Macron victory, which it got in landslide fashion, why would Euro Zone stocks be trading down 1.6% as I type? And why would the Euro trade notably lower as well (recall that I hinted in yesterday's blog post that the initial spike higher could've simply been a knee-jerk reaction)? I mean, yesterday's financial news offered up pieces that, for example, talked of the Dow stocks to own in a rising Euro environment.
There's that old Wall Street adage: "Buy the rumor, sell the news"... which would be a mantra for those who look to exploit short-term opportunities. Once the event occurs, if there's no followup event in the offing, take your profits and go searching for the next exploitable opportunity. That, I'm guessing, explains today's counter-intuitive move.
The almost complete drying up of the net short position among Euro futures traders (chart below) says that there was a notable pick up in long (bullish) positions just prior to Sunday's vote. Today's action points to profit taking among those new longs.
I.e., market internals suggest that this morning's action should not have us rethinking our bullish view of the Euro Zone just yet.
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