Courtesy of David Brown, Sabrient Systems and Gradient Analytics
Beginning on last Monday, August 6, the S&P 500 has turned in daily returns of +0.23%, +0.51%, +0.06%, +0.04%, and -0.13%. The average return has been 0.15% per day. Is this thing even alive?
The VIX (S&P 500 Volatility Index) hit a 52-week closing low today at 13.70. The market hath neither fear nor pulse. In fact, besides 2008, today’s VIX close was the lowest since 4/5/2005, almost before VIX began trading in late 2003.
Now, before you mathematicians jump on my back by pointing out that the S&P 500 would make about +38% a year if it duplicated that feat, I admit, it would quite nice but quite boring which I guess is ok. But volume has been about half of its normal summer rate! Basically we are having a seller’s strike. Almost no one wants to sell.
Why might that be? Everyone is happy? Doubt that. Everybody thinks things are going to get better? Really! It is probably true that most believe that Europe will find some way of its mess despite all the false promises and bickering. Probably so.
We will have an election in the USA in November, and after that, things will get better. The first part of that sentence is true. I can’t even guess at the second part. But conspiracy theorists will probably say that the FED will definitely implement QE3 or even something better in September to assure the President’s re-election. But President George W. Bush appointed Dr. Bernanke in 2006. On the other hand, President Obama re-appointed him in 2009, and they seem to have supported each other since then. Probably a pretty good bet that the Fed will take action if the economic numbers don’t pick up soon. And that is a good reason not to sell.
Speaking of economic numbers, we are getting a plethora of new numbers this week and important ones at that. We get Retail Sales tomorrow (if same store sales mean anything and they do), and it is likely that this number will be at least ok. The market expects 0.2%, compared to last month’s -0.5%. We also get Producer Price Index and Business Inventories tomorrow. The former will likely be ok and the latter about a 50/50 chance. On Wednesday, we get Consumer Price Index, Empire Manufacturing, and the very important Industrial…