Friends
Stocks finished October with wonderful gains, despite today’s disappointing finish to the month. Perhaps it was the ghouls and goblins in the air, as the Dow Jones Industrial Average limped into the close finishing down 275 points for the day and just below 12000 at 11955. The S&P 500, which was still up about 11% for the month finished the day down 31 points to close at 1253. The S&P traded right through the support level we are watching at around 1257. This will be a critical level to watch for the next few days. If we can hold this level we can build on October’s rally. If we can’t hold the 1257 level then we might have a challenging beginning to November.
The morning began with Europe trading very weak as last week’s euphoria may be wearing off. Concerns that Italy is going to have difficulty getting the political will to tackle the austerity measures needed continue to weigh on Italian bond yields. Also, the unwinding of MF Global after its disastrous leveraged gamble in European debt appears to have sunk the firm, seems to have cast a unpleasant cloud on trading today.
Gold was lower during the day and finished down $26 to close near $1720, and oil was down about 59 cents to close near $92.76. The dollar after having suffered the last few weeks, rallied today at the expense of stocks and commodities. The inverse correlation with the dollar has continued into the fourth quarter. Dollar up in the morning = stocks and commodities down. Dollar down in the morning = stocks and commodities up.
We have the employment number on Friday to look forward to, but in the meantime we will watch the political wrangling out of Europe along with the additional earnings reports during the week. Have a nice Halloween evening everyone.
