As long as you were not paying attention to the markets intraday, Wednesday’s price action was quite boring. Devaluation concerns for the Chinese Yuan currency caused wild market swings worldwide. In the U.S., Wall Street ultimately decided by the closing bell that these concerns would be shrugged off for now as we once again have ended up where we started in the dead center of a range begun in February. The 200 day moving average continues to act as support in the S&P 500. The Dow Jones is the most bearish of the broader markets, experiencing a “death cross” of the 50 and 200 day moving averages. These types of markets are ideal for certain options strategies. To learn more about this, click here: http://www.optionsuniversity.com/oua-starter/
Volatility spiked in a big way briefly jumping to 16.28, to beat by one penny a recent high in the CBOE Volatility Index (VIX) reached on July 27th. By the end of the day, volatility had cooled down considerably to close at 13.61. These types of fluctuations are not typical in the dog days of summer, and might suggest an even wilder ride in the fall:
OVERSEAS: Following the U.S. lead, Asian markets were broadly and solidly up in overnight action. Shenzhen and Shanghai markets were the strongest with the former popping more than 2% in a single day, and the Nikkei also was strong, rising about 1%. In Europe, the story was the same…very broadly and strongly up, with literally every major market working to the upside.
OIL: Crude prices have touched 6 year lows as a result of currency issues and strong OPEC production. It seems that the oil industry is following the Amazon strategy of buying market share even if it comes at lower profit levels. Oil inventories remain quite high, but once again managed a small decrease of 1.7 Million barrels.
JOBS: The Labor Department’s report on job openings was moderate and mixed with slight increases both in hiring and layoffs offsetting one another, and in no way suggesting an acceleration of the U.S. job market. For new jobless claims, the anticipated consensus was that rates would remain about the same at around 270K claims for the week. The actual figure was a mildly disappointing 274K new claims for the current week.
RETAIL: Retail sales, particularly on the high end, have been relatively soft recently. An improvement in July was anticipated with new car sales expected to lead the way. The actual figures did not disappoint coming in slightly above expectations with a rise of 0.6%.
BIOTECH INSIDER: Biotech issues, in general, appear to be finding a support level near 20 day lows after rising and falling significantly in recent weeks as measured by the Biotech Ishares ETF (IBB). There are several very interesting individual biotech stock stories, as companies fight to create massive breakthroughs in this space. To learn more about this, click here: http://optionswealthinsiders.com/biotechv2/
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