Record Lows & Market Rally - Doo Prime News
Doo Prime News > Analysis > Expert Opinion > Record Lows & Market Rally

U.S. stock markets closed strongly and higher on Friday, 1st October 2021, posting the best start in the month of October since 2019. 

Putting that aside, however, the markets closed lower once again for the week and for the quarter. 

According to Bloomberg, it was the biggest weekly slide since February, and the biggest monthly selloff since March 2020, marking this the worst quarter since the pandemic began. 

“The S&P 500 has now gone an incredible 317 trading days in a row above its 200-day moving average, one of the longest streaks ever,” according to Ryan Detrick, Chief Market Strategist at LPL Financial. “What we are getting at is a 5-7% pullback could potentially come at any time given we haven’t had one in so long.” 

The weakness we experienced last week was blamed on the government shutdown, Federal Reserve tapering, elevated inflation, supply-chain bottlenecks, a global energy crisis, and regulatory risk coming from China. 

Here are the closing levels on Friday: – 

 Last                Change        %Change 
Dow Jones  34,326.46 +482.54    +1.43% 
S&P 500  4357.04 +49.5      +1.15% 
Nasdaq Comp  14566.70 +118.12 +0.82% 
US 10Y    1.465%   
VIX  21.15 -1.99 -8.6% 

Friday’s rally or, you could call it a retracement – was on the back of Merck’s Covid Pill as this Bloomberg report suggests.  

Companies that benefit from reopening trade rallied on the back of that. 

Better-than-expected economic data were released on Friday. This was another factor that contributed to the rally. 

As we did in last week’s commentary, I would like to look at the 50- day moving average for the S&P to give us some guidance on what to expect as we have to be aware of the technical nature of markets. 

As of the close, the market is still below the 50-day. In fact, we were below that most of the week. And whenile we did penetrate below the 100- day moving average during the week, we managed to close above that by a small margin. 

Technically this is bearish. Although, Friday’s price action somewhat puts a question mark on this.  

Additionally, the VIX will tell you that markets are still volatile. I think the moves in the 10-year yields are also the cause of volatility. You could say the rebound was after the yields traded back below 1.5%. 

With the expectation of a better payrolls number this coming Friday, 8th October 2021, our “wait and see” attitude may have to change. Either the buying on dips continue to frustrate the bears or we break technical levels and start a downtrend. Against this background, only time will tell. 

Source: CBOE, Reuters, Bloomberg  

This commentary is written by James Gomes 
James has been in the finance industry for over 30 years and most recently worked for a large US bank for more than 20 years. 
 

Disclaimer 
While every effort has been made to ensure the accuracy of the information in this document, the DOO Group does not warrant or guarantee the accuracy, completeness or reliability of this information. The DOO Group does not accept responsibility for any losses or damages arising directly or indirectly, from the use of this document. The material contained in this document is provided solely for general information and educational purposes and is not and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, securities, futures, options, bonds or any other relevant financial instruments or investments. Nothing in this document should be taken as making any recommendations or providing any investment or other advice with respect to the purchase, sale or other disposition of financial instruments, any related products or any other products, securities or investments. A decision to invest in financial instruments, any investment related products or any other products, securities or investments should not be made in reliance on any of the statements in this document. Before making any investment decision, prospective investors should seek advice from their own financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision. 

Without limiting any of the foregoing, in no event will the DOO Group or any of its affiliates be liable for any decision made or action taken in reliance on the information in this document and, in any event the DOO Group and its affiliates shall not be liable for any consequential, special, punitive, incidental, indirect or similar damages arising from, related to or connected with this document, even if notified of the possibility of such damages. 

This document contains forward-looking statements. The forward-looking statements included in this document are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on the analysis of DOO Group of the statistics available to it. Assumptions relating to the forward-looking statement involve judgments with respect to, among other things, future economic, competitive and market conditions all of which are difficult or impossible to predict accurately. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the DOO Group that the forward-looking statements will be achieved. The DOO Group cautions you not to place undue reliance on its forward looking statements and we assume no responsibility for updating any forward-looking statements. Expressions of opinion are those of the authors and are subject to change without notice. 

This document is strictly confidential to the recipient. It is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly to other person or published, in whole or in part. For any purpose, neither this document nor any copy of it may be taken or transmitted into Singapore, Hong Kong, Malaysia, United Kingdom and the United States or distributed directly or indirectly in Singapore, Hong Kong, Malaysia, United Kingdom and the United States. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document should inform themselves about, and observe any such restrictions. By accepting this report you agree to be bound  by the foregoing instructions.  

Share to