As I mentioned yesterday, today illustrates why we stay out of the prediction game. After yesterday’s gains in stocks, today was a total mess. Despite a mundane overnight futures market, stocks took a dive right from the start of trading and kept falling throughout the day. Yes, the Durable Goods number was lousy and Weekly Jobless Claims moved back up slightly, but this move was not about today’s economic data. Then what was today’s move all about, you might ask? Without sounding like a wise guy, sometimes selling just begets selling. Here are some of the reasons offered for today’s downdraft: The S&P broke its 50 day moving average (and heading towards its 100 day), rumor that a hedge fund was in trouble and liquidating hitting the market with massive sell orders at the open, talk about a big fixed income sell program, high-yield debt selling off, Yen climbing due to concerns over Japan’s Government Investment Pension Fund, comments from a Fed official, general growth concerns and of course heightened terror concerns. Any, or all of these could validate a desire to sell something, but once again selling often just begets selling.
By the close, the Dow Jones Industrial Average was down 264 points to finish the day at 16,945. The S&P 500 was down 32 points to close at 1965. Gold was up $2 to trade at $1221 per ounce, while oil was down $.28 to trade at $92.52 per barrel WTI.
This has been quite a volatile week with the bears seemingly back in control. But as I pointed out above, markets seem vulnerable to almost any type of news or rumor, and seem to be easily pushed around. It sure has been a difficult week to be in the “prediction” game. We’ll let you know how the week wraps up tomorrow. Stay tuned.
Have a nice evening everyone.