In what is probably one of the most bizarre scenarios I can think of, the Dow Jones Industrial Average (DJIA) trades in a low-to-high range of more than 1000 points and ends the day more or less flat (relative to where it was throughout the day). As noted this morning, the DJIA was down 697 points at it lows. We then spent the bulk of the day in negative territory before an afternoon bout of buying pushed the DJIA to a gain of 322 points. That nets out to range of 1019 points.
Despite the late-day bounce, it was still an overall down week for the broad market indices. As I noted last night, we headed into today with S&P 500 (SPX) and Dow Jones Industrial Average (DJIA) down 17% on the week. Those figures are more or less the same here. Adding to the "bizarre scenario" is that gold turned lower around noon, even as the broad market indices were firmly in negative territory. I was always told that gold is where you wanted to be when things got "really bad" but that doesn't seem to be paying off. The streetTRACKS Gold (GLD) was more or less flat on the week.
While it was an ugly week, I don't think that all is lost. I already laid out my thoughts in the three posts below so I won't regurgitate it all over again...
The only thing I want to add is the monthly chart of the CBOE Market Volatility Index (VXO), which at the end of this post. The VXO is based on S&P 100 (OEX) options and was the "original" VIX. In the "long-term perspective" post I discussed the VIX, and I think it is also worth noting the VXO popped above 100 at one point today . This put it as close as it has ever been to the 1987 spike. The VXO is also trading at a decent premium to OEX historical volatility.
The bottom line is that I think we have the ingredients for a potential bounce. Perhaps I am just punch-drunk on the market swings, but this is the most upbeat I have felt in some time. I usually try to keep an even bias and not let my feelings influence this space but it feels like the downside action is reaching an short-term extreme here. I'll revisit these comments next Friday to see how much egg I have to wipe off my face. Feel free to send me your thoughts on this.
| Index |
Index Value |
Point Change |
Percent Change |
| S&P 500 (SPX) |
899.2 |
-10.7 points |
-1.18 percent |
| Dow Jones Industrial Average (DJIA) |
8451.2 |
-128 points |
-1.49 percent |
| Nasdaq Composite (COMP) |
1649.5 |
4.4 points |
0.27 percent |
| Russell 2000 (RUT) |
522.5 |
23.3 points |
4.66 percent |
| CBOE Market Volatility Index (VIX) |
69.95 |
6.03 points |
9.4 percent |
Chart Courtesy of Thomson Financial
Chart Courtesy of Thomson Financial
Chart Courtesy of Thomson Financial
Chart Courtesy of Thomson Financial
Chart Courtesy of Thomson FinancialOn a personal note, I will be out of the office on Monday, though do I hope to put up a couple of posts in the early morning. As usual, a few of my colleagues will be filling in for me. I will return on Tuesday. Have a great weekend!
Copyright Schaeffer's Investment Research http://www.schaeffersresearch.com