The volatility continues. The Dow swung in a greater than 700 point range again today. The story is simple: most traders believe we will be in a trading range for the next several months and will test the intraday lows we saw on Friday. The bad news:
1) continuing, vague concerns that government efforts will not be effective
2) we saw this concern play out in the t-bill market, where huge T-bill auctions came off at lower yields. We are practically paying the government to lend them money
3) weaker economic data in the form of retail sales
4) which was born out by the Fed's Beige book: "economic activity weakened in September across all twelve Federal Reserve Districts."
There was some good news:
1) LIBOR rates lower
2) and the belief that a tidal wave of liquidity is coming
Once again, the commodity complex sold off the most: energy stocks down 15 percent, commodity stocks down 12 percent./ Defensive names like consumer staples and healthcare were down 5 percent. New low in the Dow Transports.
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