Nasdaq early morning decline failed to break below wave 4 swing low, implies wave 5 rally is still in progress, and the uptrend should continue to its next target up.
Key level for Tuesday is 2803 (March contract).
-- Above 2803,look for NQ to keep going higher, next target is 2820-2825.
-- Below 2803, look for NQ to re-test Monday's swing low and then last Wednesday's swing low. A clear break below Wednesday swing low implies wave 5 rally has ended, look for NQ to drop down in ABC wave pattern.
Fitch downgrades Italy's sovereign debt rating
The international ratings agency Fitch has downgraded Italy's sovereign debt rating by one notch to BBB+ from A- and added the outlook is negative.
Fitch pointed in particular to "the inconclusive results of the Italian parliamentary elections on 24-25 February" which "make it unlikely that a stable new government can be formed in the next few weeks." Italy's vote left the country in a political deadlock, with no party or coalition able to form a government on its own, and party leaders have made little progress in talks so far.
The uncertainty has not been reflected on stock markets until now, but should Italy slip back into the debt mire it could have a knock-on effect on other vulnerable countries in the eurozone. Italy's borrowing costs rose slightly to 4.599 per cent on 10-year government bonds from 4.596 per cent just before Fitch's announcement.
The agency also forecast Italy's public debt, one of the eurozone's biggest, would peak this year at close to 130 per cent of GDP (gross domestic product), worse than Fitch's previous estimate of 125 per cent. It said the economy was likely to shrink by 1.8 per cent this year. Fitch's BBB+ rating nonetheless leaves Italian debt in the investment grade category.
The agency estimated Italy's public debt would fall to around 2.5 per cent of GDP this year. That would put Rome below the eurozone public deficit ceiling of three per cent of GDP. Unemployment in Italy is at a record 11.2 per cent and the economy shrank 2.4 per cent last year, while public debt rose to 127 per cent of GDP from 120.8 per cent in 2011.
