Same old or is it?
by Peter Switzer
Are stock markets virtually becalmed in a ‘same old’ pattern of not selling-off big time but still not excessively keen to buy? Yep, that’s about it and the first chance for this ‘same old’ to become a ‘new thing’ is likely to be Friday, USA-time, when the Federal Reserve’s Ben Bernanke and the European Central Bank’s (ECB) Mario Draghi speak at Jackson Hole, Wyoming.
There’s no really big economic or market news that can capture the monetary imagination of professional traders and fund managers, so it’s a waiting game.
There’s a tension in the air as the technical experts say the charts are ‘toppy’, meaning that there has been a big run of stocks since June 4, but now some good or bad news is needed to take stocks to either significantly higher or lower levels.
The Dow was off 33.3 points or 0.25 per cent to 13,124.67 while the S&P 500 was virtually flat at 1410.44, off 0.69 of a point.
The big market mover comes next week when the ECB formally explains the game plan for lowering borrowing costs for Spain, Italy and other indebted eurozone countries and so, as I have said, we wait.
That said, the only ‘same old’ not happening is shareholder nervousness — it’s growing with the VIX or fear index now up to 16. This is still a low reading but a couple of weeks ago it was below 14.
One interesting issue to watch is how the indexes finish this week, where the Yanks could have the first positive finish for the key indexes in August since 2009.
If you’re looking for another positive, European markets finished strongly positive with the German DAX up 1.1 per cent and the CAC 40 in France rising 0.86 per cent.
Last night on my Switzer program on the Sky News Business channel, the chief economist at RBS Morgans, Michael Knox, said he remains bullish on the ECB’s ability to deliver good news next week, but he says a lot of it has virtually been slowly done and I guess that’s why the German stock market is up close to 20 per cent since June 5.
The big gains could set us up for that old market cliché — buy the rumour, sell the fact! However, if this happened, the fall would not be far and new buyers — more conservative ones — would rejoin the stock market and we would be off to the races!
I think ‘same old’ ends on September 6.
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Published on: Tuesday, August 28, 2012
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