The short- and long-term charts of the TED spread below show that the spread had increased quite sharply since June this year, but peaked with the announcement of the ECB’s long-term financing operations (LTRO) in December 2011, i.e. the ECB making cheap 3-year loans to European banks. Confidence in interbank lending has started improving, but the European TED spread needs to show a more meaningful decline in order for a calmer environment to prevail..
The sell off was not broadly based, the U/D Volume is possitive again, the ($ADVN - $DECN) quickly climb back to neutral, and strong stocks and banks are holding well during this dip.