Market Updates

 

Update for Aug 3rd:

Volatility remains the main theme of the market these days. With Dow up more than 200 points in the past 2 sessions, it is currently down more than 200 points as I write this. The late afternoon selloff was triggered by comments from Bear Steins's CFO and he mentioned that the current credit crisis is the worst during his 22 years career. Put this in historical perspective, the US market has experienced loan crisis in late 80s, emerging market debt crisis in 1994 and Asian financial crisis in 1997 and Long-term Capital crisis in late 1998 and also corporate scandal in 2002 during the past 20 years. Each time it looked like the end of the world is coming but turns out to be just a temporary pullback. Will this time be different? I guess only time will tell but if history is any guide, this time should be no different. Remember, the market is always driven by greed and fear and currently fear is in play as evidenced by high VIX level. Rule number one during this kind of turmoil period is stay cool. 

 
Update for Aug 2nd:

The market has risen for the second day in a row. Some investors obviously thought that the more than 800 points drop in Dow during the past 2 weeks was a little overdone. VIX dropped by more than 10% but remained at an elevated level. One thing worth noting is that the market is very selective in terms of sector movements. Although both Dow and Nasdaq went up by more than 0.7%, the broad S&P500 only went up by 0.4%, indicating lack of broad buying. Both Treasury yield and Yen are stable while most world markets had a rally after yesterday's huge selloff. Tomorrow will bring this week's most important Non-farm payroll reports. It will be interesting to see how traders will react to the numbers. As earning season is close to its ending, investors should return to focus on the fundamentals of economy pretty soon.

 
Update for Aug 1st:

The 1st day of the new month continues to show the wild side of the market(Just as I typed this sentence, Dow has gone up by more than 50points). With VIX sitting at 25+, the volatility index is at a level not seen in more than 4 years. In my memory, there was once in late 2002 that VIX had hit 45. But 25+ is a very high level as just one year ago, the index was at around 9.8.  Oil hit a new intra-day high before giving bacy almost 2% at the close(the inventory data were pretty bullish for oil price). Yen doesn't move much today which is a good sign. Overnight, some news related to continued subprime worries in the third Bear hedge fund caused the global market to tumble, in some cases as much as 5%. Earlier in the day, rumours about potential failure at a homebuilder caused huge selloff in the sector as well as the broad market. Although I don't expect market to tumble another 500 points from there, it may take a while before the volatility returns back to the normal range(12-15). The economic news today was mixed again with better news in housing front but worse one in manufacturing part. But it is clear that the current market is not driven by econ news anymore as I mentioned previously.

 
Update for July 31st:

This summer is anything but quiet. Bulls simply cannot celebrate the more than 100 points early gain and got stunned by more than 150 points loss at the end. The reason cited for this huge reversal is again subprime, which has been used as an excuse for the past 5 months when the market has some big selloff like today. The VIX index shot up by more than 10% today, indicating investors are still nervous. Oil closed at a new record high and Yen showed strength against dollar, which is a sign that Yen carry trades unwinding hasn't stopped yet. Most corporate news and earnings are positive while economic news are mixed today. For the time being, the market is not driven by fundamental but rather by investor sentiment. But sooner or later, investors should return to fundamentals.

 
Update for July 30th:

The market rebounded from last week's 4.5% decline. However, it's still too early to tell the indices have bottomed. Yen depreciated a little bit as the unwinding activities slowed today while most Asian and European markets closed higher, with China hitting another historical high. Oil prices dropped by nearly 2% and recently the open interests at NYMEX are extremely high, indicating huge bets by funds. If there is no major hurricane, I expect oil prices to peak soon. There are several economic reports coming out this week and earning season has come to an end. With one more month remaining this summer, it is time to prepare for the fall/winter season.

 
 

 

 

 
 

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