Friends
Yes indeed, volatility has returned. Trading in stocks lately is beginning to bring back memories of 2011. Today, we began with a 100 plus point move up in the Dow (for no particular reason), but by late morning the gains had evaporated, and selling persisted throughout the trading session. Adding to the pain for investors is the decline in bonds. For the first time, in a long time, we saw stocks and bonds fall together. Over the past several years, anytime stocks sold off, bonds were the recipient of the proceeds (similar to what we saw yesterday). But today, both stocks and bonds fell in the afternoon.
By the close, the Dow Jones Industrial Average was down 126 points to finish the day at 14,995. The S&P 500 was down 13 to close at 1612. Gold was up $10 to trade at $1387 per ounce, while oil was up $.45 to trade at $95.83 per barrel. Both gold and oil going up on a day the dollar fell reminds us of the “risk on / risk off” days of last year. Stocks on the other hand, seem to prefer a rising dollar these days, as we have seen for the most part in 2013 (the opposite of 2011 and 2012). The 1624 support level for the S&P did not hold today and that means around 1600 is the next line in the sand. We’ll see if that can hold.
Volatility can be your friend, but traders got so used to things just going straight up this year, they seem a little flat footed at the moment (like deer in the headlights). This is a good test for the bulls. The first five months of the year seemed a little too easy. Now, we’ll see how the bulls handle a little adversity.
Have a good evening everyone.
