S&P and NASDAQ Finish Lower for the Month
James Hyerczyk from ForexHound.com at 10/31/09
December S&P and NASDAQ stock index futures finished lower for the month while the December Dow eked out a small gain. The closing price reversal tops in the S&P and NASDAQ indicate that the selling is greater than the buying at current levels and set up the possibility for a 2 to 3 month decline. Today’s sell-off was broad-based, which is another sign that the 10% to 20% correction that analysts have been anticipating may actually be taking place.
December Treasury futures rose as Bond and Note yields fell sharply on the stock market decline. Traders aggressively moved money from the higher risk markets into the lower-yielding but relatively “safe” fixed income markets. This week’s Treasury auction was well received as robust demand from foreign traders helped keep yields stable. Expectations are for T-Bonds and T-Notes to remain firm as long as fear continues to drive investors out of commodities and equities.
The U.S. Dollar posted a strong gain for the week, but finished the month slightly lower. The shift in sentiment from higher risk assets to the lower risk, lower yielding Dollar is an indication that investors may think the global economy is still fragile and that the recovery will be labored and rough.
December Gold futures traded down on Friday as the Dollar strengthened. The break wasn’t as bad today as it was earlier in the week. This could be an indication that some traders are still holding on to gold out of fear of an inflationary spike. Some traders are still hanging on to long positions in the hopes that central bank spending and excess liquidity will trigger inflation all around the globe.
Speculation, a higher stock market and a lower Dollar drove December Crude Oil higher during October. Now that equities are weakening and the Dollar strengthening, the only factor holding this market higher is the speculators. Supply and demand figures are indicating an abundance of oil, so if short-term traders decide to begin paying attention to these numbers, this market could be setting up for a big fall.
