Friends
It was quite an active week, wasn’t it? After gaining a couple hundred Dow points on Monday and Tuesday, stocks sank 550 Dow points on Wednesday and Thursday. It seemed traders couldn’t decide which way to go for most of the day today, as stocks waffled back and forth throughout the morning. As today was an option expiration day, volatility was expected and that is what we got. By the afternoon, rumors that the Fed was already regretting the more hawkish stance that they took this week sparked a little rally in the last hour, but nevertheless there was damage done this week.
By the close, the Dow Jones Industrial Average was up 41 points to finish the day at 14,799. The S&P 500 was up 4 points to close at 1592. Gold was up $6 to trade at $1293 per ounce, while oil was down $1.34 to trade at $93.83 per barrel WTI.
Yes, this was a very volatile and hectic week. Traders decided that the Fed had turned hawkish (intending to take the punch bowl away), and did not want to hear any explanation to the contrary. If indeed, the Fed intends to be data dependent, as Dr. Bernanke proclaimed, then we simply need to pay attention to economic data to understand what the Fed is likely to do next. Unfortunately, traders don’t like to wait for data, and always try to trade ahead of the Fed. Oh, that could work, or maybe it won’t. I guess the point is with respect to bonds and stocks, while one waits for data to confirm one’s views, one just might get run over. Let’s see what’s on trader’s minds on Monday, after a weekend of reflection.
Have a great weekend everyone.
