D&D Note (8-1-2012)
Markets got a copied paste FED statement after the latest FMOC meeting. More of the same, ready to act, but not ready yet. Remember September is traditionally when the FED loosens, next meeting is Sept 12th and 13th. Now all investors attention turns to Mario Draghi and what the ECB decides or doesn’t decide to do, that statement comes out tomorrow morning. Trading tomorrow will all hinge one direction or the other on what Super Mario will say.
If the European Central Bank does not live up to their recent rhetoric, which keep in mind is pre-baked currently into the markets, we’ll see a negative reaction across asset classes. To send markets into rally mode we’ll need some sort of language or guidance on another round of LTRO.
Markets saw another “technology issue” today when sudden trading moves outside the band occurred due to a trading program that Knight Capital (KCG) operates. Circuit breakers where triggered on some but not all of the 150 stocks that where effected. After the closing bell six of the stocks trades during that 30 minutes where canceled.
Shares today of Knight Capital dropped more than 30%.
Investors should always keep in mind that today 70% of trading is done by computers. We, humans, in a sense no longer officially control our laissez-faire system.
Today’s action reminds one of the “flash crash” in May of 2010, the BATS IPO, and of course the botched Facebook (FB) IPO.
Recent rumors of a potential stock split in the shares of Apple (AAPL) have helped the equity rally 4% this week. The 10 for 1 split could potentially allow the company to be listed on the DOW. Shares closed today at $606.81.
The DOW (INDU) lost 38 points at -0.29%. The Nasdaq (COMP) lost 19 points at -0.66%. And the S&P 500 (SPX) fell 4 points at -0.29%
Oil gained 79 cents to close at $88.85 a barrel.
Gold lost $6.80 to close at $1,603.70 an ounce, if we don’t see action out of the ECB expect prices to fall further, the ETF GLD is tempting under $150 a share.
The 10-Year Note fell today pushing the yield up to a still staggering low 1.49%.
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