It's hard to make sense of current market behavior. What is still driving markets lower is a lack of conviction about euro zone "fixes" combined with sharply lower commodity prices. Much of the latter may have to do with Bank of America (BAC) strategist David Cui suggesting China growth could come in below 7%. For them, that would qualify as a "hard landing". This may be why important commodities like base (JJC, DBB) and precious metals (GLD, SLV) prices moved sharply lower. The reality of a global economic slowdown trumps most bullish considerations like "stocks are cheap" and so on.
Meanwhile in the euro zone we have an important Thursday vote in the German parliament to approve funding for the EFSF. Finland approved the current version today but still wants collateral in excess of what's available to other nation members. At the same time, Attila Szalay-Berzeviczy, head of large Italian UniCredit Securities predicted
. That's not very helpful is it? And,
are not too thrilled by the idea of taking more losses than previously agreed to.
Stocks overall were choppy most of the day only to see heavy afternoon selling sending stocks sharply lower reversing all of Tuesday's gains. The dollar, weaker most of the day, rallied around the same time as stocks fell and the euro slid. As stated commodities were weaker across the board and bonds were slightly weaker.
Of course Amazon (AMZN) was a featured performer launching several new products including Fire which is designed to compete with Apple's (AAPL) iPad. Though Fire lacks some of the compelling features as offered by the iPad, it's priced at only $199 making it half iPad's base price. Perhaps it will find a retail niche especially for Christmas. AMZN gained 2.50% while AAPL declined .50%.
Volume was average for the recent period while breadth per the WSJ was quite negative.
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is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.
McClellan Summation Index
is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.
is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.
Continue to Concluding Remarks
As this is written Bernanke is making another speech. It's been expected that either the administration or the Fed would ask for a new mortgage relief plan and Bernanke seems to hinting at something along those lines.
There are many now who believe a Greek default is a certainty no matter the bailout packages. The latest spin is the call for an "orderly" default which is
. It sounds only somewhat convincing since fire storms are hard to contain.
After the close Advanced Micro Devices (AMD) lowered its forecast/guidance and the stock plummeted nearly 10%. This is what investors will be watching--guidance.
Thursday yields important GDP and Jobless Claims data.
Let's see what happens.
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