By Chris Becker
Following the steady (if internally weak) flash PMI in China yesterday, European markets absorbed the German, French and EZ wide PMI prints last night without any surprises and risk returned. Continental markets were up over 1% while the FTSE could only rise 0.3% but futures were bid following the US lead:

The daily chart above still shows some high intraday volatility but gaining momentum. The picture extends to US stocks, which are also absorbing not bad news with earnings from Caterpillar beating expectations and jobless claims coming in low and steady.
The S&P500 gained 1.2% and the tech heavy NASDAQ up 1.6% with the former looking overbought on the hourlies:
As I said yesterday, I went long on a break above 1940 points taking some small profit but keeping open one position. I am concerned that on the longer term charts we haven’t returned to meaningful momentum and the end of QE3 on October 28 next week could be a catalyst for another dip. Again, I always let price be my guide.