A lot already has been written about today being the one year anniversary of the “Flash crash.” Most of the articles out there are throwing out a couple numbers and giving a perspective of whether changes made since then are having any sort of effect to prevent another “incident.” That’s fine, but sometimes it’s important to just go back and remember why this was a big deal. (more…)
With regulatory reform set to rock the trading universe, what’s happening in Washington is never far from the minds of investors. Political uncertainty can equal skittish markets these days. However, this phenomenon is nothing new. According to this MarketWatch story, the stock market historically has performed much better when Congress is out of session than when it’s in session (between 1897 and 2004, the Dow had annualized return of 5.3% when Congress was out of session vs. just 0.4% when it was in session). Congress is set to go on its summer recess at the end of this week, so, if history is any indication, the market could be in for a lift. (more…)
In a speech in South Carolina today, Federal Reserve Chairman Ben Bernanke gave another subdued forecast for the economy. He said that while “the financial crisis appears mostly behind us…we still have a considerable way to go to achieve a full recovery in our economy” due to persistent unemployment, foreclosure and lost savings for many Americans.
Looking for some stock picks for July? Tom Busby, president and CEO of DTI, offered some ideas at DTI’s Windy City Workshop in Chicago this morning. Busby said the current market “gives hope for opportunity.” He said that in general, traders should pick stocks that are liquid and widely followed, so that news on companies is easily available.
The Federal Reserve released the minutes of its June meeting today. Here are their predictions, which contrast with what many experts are predicting (namely, a double-dip recession) as economic data on housing and employment remains grim. In the minutes, the FOMC said it “continued to anticipate a moderate recovery in economic activity through 2011.” However, due to current financial conditions “most participants revised down slightly their outlook for economic growth, and about one-half of the participants judged the balance of risks to growth as having moved to the downside.” (more…)
The Dow Jones and S&P 500 are up today, but recent dips due to the disappointing unemployment numbers from Friday, as well as deeper pullbacks from earlier in the year, have some analysts wondering if what was once thought of as a correction is actually the beginning of a longer-term bear market. This CNBC piece suggests that a bear market is looming, with one analyst saying that the market is pricing in a significant slowdown. For the markets piece in our August issue, we spoke with analysts who were of differing opinions about where stock indexes were headed for the rest of the year. Some saw a recovery in the fall, while others agreed that a long-term bear market is on the horizon. Be sure to check out the complete analysis on stock indexes in our August issue, online July 26, and let us know where you think the market is headed and how you’re planning your trading accordingly in the comments below.
The bears have been taking a beating and U.S. stock indexes have been charging ahead since the 800+ point correction in the Dow beginning with the 416 point drop on Feb. 27, reversed.
While the markets of the late 1990s, dubbed by Fed Chairman Alan Greenspan as displaying irrational exuberance, were somewhat understandable given the long period of time since anyone saw a bear market, the pain of the 2000-02 bear market should be relatively fresh in investors’ minds.
The bulls may argue that warning of an overheated market were prevalent throughout the 1990s and those that got out or got short too soon suffered just as much as those who jumped on the bandwagon near the top.That being said, there are some interesting and perhaps chilling similarities to the current market and past blow-off tops.
Futures contributor Garrett Jones has pointed out in the past that the four-year cycle low due in 2006 has not occurred (if you don’t count the July 2006 low). That was also the case in 1986, with the cycle low coming with a vengeance in 1987. In the upcoming June Futures Market Strategy article, Jones points out that the Dow Jones Industrial Average Index set a dubious record on April 27. It posted 19 of 21 up days. The second time in history that has occurred. The first time was in 1929, two months before the crash. In both cases the market held the 19 of 21 up day mark for a series of days. In 1968, a few moths prior to that downturn, the market set a similar mark with 18 of 21 up days. (by Daniel P. Collins)
