From the Trading Desk
Void of economic releases the market did get showered with more than $3 billion in asset purchases from the Federal Reserve. A hiccup in the morning was quickly support as the Federal Reserve Open Market Operations flooded the market with fresh new cash. Over Europe the DAX closed in the green for the 11th straight [...]
Heading into the week the US market once again watched the Nikkei continue to move further into the stratosphere. Futures were pretty anemic heading into the trading session today. Overnight news focused on the plunge in precious metals as Silver and Gold were hit hard. Despite the negative open and sentiment both precious metals were [...]
The Big Wave Trading Portfolio remains under a BUY signal and currently has zero issues weighing on it presently. On the short-term the market is very extended in price compared to trailing key moving averages. Logic dictates that a natural pullback to some form of support levels (fibonacci, price lows, or a moving average) should [...]
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NASDAQ Jumps Higher as VIX Slumps
The Greeks voted for the pro-bailout candidate helping the EURO to stay intact for now. Initially, futures markets cheered pushing higher. However, for a few indexes the rally would not last. Spanish and Italian stock markets reversed hard and closed negative while the DAX was able to hold up closing positive. Here in the states stocks go off to a bad start, but a better than expected NAHB housing index helped push buyers back into the market. Sellers turned complancent as the VIX was down more than 11% at the lows. By the close the Dow closed in the red while the NASDAQ closed higher. With the Federal Reserve Open Market Committee announcing a rate decision Wednesday traders will be unwilling to step in front of the fed. A mixed day considering the consensus thought was we were to rally big with the Greek vote.
Another interesting development was the way Small Cap stocks lagged the general market. The Dow did end in the red, but if we had a risk on trade Small Cap stocks should have been able to push out gains rivaling those of the NASDAQ. Small cap stocks could play catch up tomorrow, but on a day where we were suppose to rally more than 1% it sure looked mighty weak.
The VIX closed below the 20 level since 5/11 a show fear quickly left the market. A big drop in the VIX would normally have been accompanied by a big stock market rally. The S&P 500 couldn’t even close up 2 points on the day. On the other hand, the NASDAQ was able to close .78% higher on the day as big cap technology stocks lead the way. Volume was lower than Friday’s bloated figures, but it was lower than Thursday’s level. Institutions do not appear to be willing enough to pour back into equities despite the recent gains by the market. Volume needed options expiry to jump above its 50 day average. Volume could come in late, but 11 days after the low we still are waiting.
The Federal Reserve two day meting begins tomorrow and will announce its rate decision on Wednesday at 12:30 with Bernanke speaking around 2pm EST. We’ll get a sense if the market was right in sensing the Fed will commence QE3 or not. Until then, sit back and enjoy the ride.