Friends
Wow, risk happens fast. After rocking and rolling for months now, stocks in Japan dropped more than 7% in trading overnight, setting up for a very jittery market open here in the U. S. Remember, yesterday was that scary looking reversal day that brought the bears out of hibernation, where stocks reversed from a healthy gain to a disturbing loss in a matter of hours. Add the overnight Japanese “pullback” to yesterday’s mess and a down opening was surely baked into the cake. Indeed, stocks did fall at the open and the Dow was quickly sporting a 127 point loss in early morning trading. The bears were burning up twitter with “see I told you so” proclamations, and the bulls seemed stunned by the quick turn in sentiment. Then by midday stocks began to pare their losses and by early afternoon we were in positive territory on the Dow. The dip buyers finally ran out of gas and stocks slipped back into negative territory by the close.
In the end, the Dow Jones Industrial Average was down 12 points to finish the day at 15,294. The S&P 500 was down 4 points to close at 1650. Gold was up $23 to trade at $1390 per ounce, while oil was up $.11 to trade at $94.39 per barrel WTI. 1657 may now become a resistance point that the S&P will have to deal with for the near term. We shall see.
On the economic front, new home sales numbers were good and the weekly unemployment claims number was ok, but this market is moving on perceptions of when the Fed might start tapering their bond buying program. With all the Fed governors speaking this week and Dr. Bernanke testifying yesterday, there has been a lot of language to parse. Our opinion, for what it’s worth, is that Bernanke and crew don’t want to roil the markets and ruin whatever progress they have made (and that is very debatable), by pulling away the punch bowl too soon. They may slightly adjust here and there, but they are committed to the cause.
Have a nice evening everyone.
