As the late Harry Caray used to say “Holy Cow”. It was just last Thursday, at the opening of trading, when it looked like the downturn that we were experiencing was only going to get worse. A few trading days later, and the bulls are starting to feel pretty good about themselves. Despite weak earnings from the likes of McDonalds and Coca-Cola (and after yesterday’s IBM mess), stocks rallied right from the opening bell.
By the close, the Dow Jones Industrial Average was up 215 points to finish the day at 16,614. The S&P was up 37 points to close at 1941. Gold was up $3 to trade at $1248 per ounce, while oil was up $.10 to trade at $82.81 per barrel WTI.
Sure, the Ebola news has softened for the moment, but this crazy trading action can likely be explained by large hedge fund investors continuously finding themselves on the wrong side of the trade lately, and panicking to play catch up. If you have followed along with us for some time now you know that we are not surprised about volatility returning to the markets, but the action over the last few weeks has been breathtaking. As we often say, buckle up and keep your hands and feet inside the ride. If you have powder dry, use the violent dips to buy things you want to own. Other than that, this type of action is untradeable. That’s why it’s best to stick with your long term game plan and don’t get sucked into these crazy moments. We’ll keep you up to speed on what transpires the rest of the week.
Have a nice evening everyone.