A Resurgence Of Volatility

After a smoother ride late last Week, turbulence returned with a vengeance to start the week. Crude oil, the usual agent of anarchy headed the instability mob. West Texas Intermediate is down over 6.00% in later afternoon trading while Brent North Sea is nearing that size loss. Both top-shelf oils are again staring at sub-$30 per barrel pricing.

The chief indexes in New York are reacting as they habitually do. That is, negatively.

At 3:30 the Dow is down not quite 1.00%. The S&P 500 and NASDAQ are down over 1.25% each. The hope of forming a base on last week’s positive action now seems but a pipedream.

The problem is not just the bad juju created by super squishy oil prices. As important is the absence of a counterweight to crude weakness.

Tech can’t seem to muster the strength, despite the fact that many companies, especially in the U.S. are doing fantastical things. Space technology comes readily to mind, but so do new materials, grand-scale computing and rail and plane advances.

With the VIX (Volatility Index) squatting firmly in the 20s range, it proves no wonder that safe havens came strutting back into favor today.

Gold rose over 0.75% and silver over 1.50%. Platinum also showed impressive strength but palladium seems destined to stay in the netherworld. It fell 1.40% and is swimming in the $485-per-ounce range.

Yields on all major 10-year bonds fell, pushing up face prices in the usual reciprocal move. The U.S. 10-year is hovering just above the 2.00% yield.

The yen strengthened on dollar weakness and haven appeal. The euro also strengthened.

In the U.S., the week will bring us a raft of data on manufacturing and business activity, employment and a handful of other points.

Finally, there is the Federal Open Market Committee statement due out on Wednesday. Hopefully they will back off another rate hike right now and let some positive feeling seep into the markets. There’s the hand that rocks the cradle.

Wishing you as always, good trading,