Monday, February 27, 2012

Market Madness Daily Market Update - 2/27/12

Flat Indices, Soaring Volatility

Good evening!
It was a seemingly uneventful day by looking just at the closing numbers on the various popular indices. But those closing numbers are hiding quite a lot of intraday activity.

Starting with the COMP today we have little comment but to note that after a moderate dip lower at the open it quickly fought back up to flat, and remained there for the rest of the day where it also finished. The same basic story applies to the DOW but that index finished slightly green instead of red, after roaring back from its early dip. Almost as boring as the closing numbers alone would indicate.
One headline of note concerning the DOW however, coming courtesy of ZeroHedge:
(Dow Jones Crosses 13,000 22 Times And...Closes Under)

The small cap Russell 2000 (RUT) also finished essentially unchanged (-0.03%). However, the story is somewhat more interesting here. As has been noted in earlier Market Madness Recaps this index had left the rally party in early February and has yet to rejoin the fun since. Today it experienced a larger early morning drop than other indices before turning around with the rest of them and getting back to flat. The result is further weakening in relative strength versus large caps but this is not yet nearly enough to support the idea of a reversal. Despite the fact that I personally believe one could come at any time. It's just not what the technicals are saying.

Moving on to the S&P it was a more notable day in some respects. The SPX managed to drift up to finish at about 2 points by close, recovering much better than other indices from the early morning selling. In fact it roared all the way back from almost a 10 point deficit, to at one point 6.5 points in the green. This was a break just barely above its 2011 high (1370.58) on the intraday basis. But, of course, finishing a good 3 points below that mark on the far more important daily basis.

Despite the better gains of this index it had a more volatile day than others and far more volatility than we are used to seeing these days. This is clearly reflected in a whopping 5% jump in the VIX today. Another flashing warning sign I suspect.
But, can anything stop this market's optimism? Sure doesn't seem that way lately but alas, all good things must come to end eventually my friends.

And also in other news...
Greece has finally been declared in "selective default" by S&P Ratings.
Does this have any practical meaning? Probably not.

Stay safe out there!

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