EQUITIES: EU Bank stock option

• RES 4: 126.710 High May 26
• RES 3: 125.658 20-day EMA
• RES 2: 125.380 Low May 18
• RES 1: 124.990 High Jun 2
• PRICE: 123.960 @ 12:00 BST Jun 6
• SUP 1: 123.830 1.618 proj of the May 12 - 18 - 26 price swing
• SUP 2: 123.760 Low Oct 16 2013
• SUP 3: 123.570 1.764 proj of the May 12 - 18 - 26 price swing
• SUP 4: 123.10 Low Sep 18 2013

Bobl futures have started the week on a softer note and have resumed the bear leg once again today. Price last week traded through former support at 124.840, May 6 low. Fresh cycle lows confirm a resumption of the primary downtrend and maintain the bearish price sequence of lower lows and lower highs. The focus is on the 123.830 next, a Fibonacci projection. Initial firm resistance is seen at 125.380, the May 18 low.

• Continued tightening of the BTP/Bund spread this morning, by 5.3bps so far, after the spread tested the widest level since 18/05/20 at 211.65 on Friday.
• The spread is now at 205.7bps
• RECALL as per the FT overnight: "The ECB is set this week, to strengthen its commitment to prop up vulnerable eurozone countries debt markets if they are hit by a sell-off, as policymakers prepare to raise rates for the first time in more than a decade."
• "The bulk of the 25 governing council members are expected to support a proposal to create a new bond-buying program if needed to counter borrowing costs for member states, such as Italy, spiraling out of control."

Chart source: MNI/Bloomberg