The MIB is the biggest gainer in Europe today. Morgan Stanley writes that Italian stocks are “unduly cheap relative to BTP spreads”.

The investment bank says Italian equities reflect a high degree of uncertainty and lack of further “bad news” regarding the budget could lead to a relief rally for stocks.

Italian banks are also boosted extra in today’s trading by Tria’s positive comments.

MIB index putting on a strong rally. Note the index is still trapped inside the negative trend. A break above the resistance at 21 000 and this index could spark a further squeeze move higher.

Note the recent MIB relative bullish move versus Euro Stoxx 50.

Unicredit is putting in a strong candle today. The big resistance is at 14, right around the level for the negative trend since May, as well as the 50 day average.

Intesa, the biggest gainer in Euro Stoxx 50 today, shows a similar chart to Unicredit. Intesa has already spiked to the 50 day average and the negative trend line. A break above the 2.4 resistance and this much hated space could continue squeezing higher. Italian 10 year taking a dive sub the 3% level. Break of the rising trend since May?

Source: charts by Bloomberg