Market volatility took on a new meaning today as the Dow rose 107 points after having slid way south to a loss of 112 points early on with all major indexes following suit in similar fashion.
To be clear, nothing was resolved in regards to the fiscal cliff issue, but much jawboning by Speaker John Boehner and President Obama threw an assist to the faltering markets and up we went for most of the day. And that’s how it will be for the next few weeks in that nothing matters but the comment of the hour by anyone who can get TV time.
“Remaing hopeful” or “being optimistic that we can continue to work together” is nothing but the same old rhetoric that makes for a nice photo op but has no content value other than that the markets feed on any hopeful comment with traders gaining optimism and moving into ‘risk on’ mode.
In other economic news, pulling the indexes lower early on, were disappointing new-home sales, which fell 0.3% in October after having risen 0.8% the month before. Still, some analysts consider housing to still be in a slow but steady recovery. I think the jury is still out on that theme.
The Fed’s Beige Book contained no earth shattering news and was largely ignored by the markets. After all, we have heard the phrase that economic activity has “expanded at a measured pace in recent weeks” many times in the past.
As I mentioned before, most upcoming economic news will take a backseat to the fiscal cliff negotiations, and you can expect to be peppered daily with similar phrases as I pointed out above. Sooner or later, howver, the market will want to hear something tangible and meaningless words will not longer suffice to keep equities at these elevated levels.
Our Trend Tracking Indexes (TTIs) header further away from their respective trend lines with the Domestic TTI now hovering at +1.89% while the International TTI sits at +3.80%.
On a personal note, I have a few afternoon commitments for the remainder of this week, so my commentary will be shorter than usual and more succinct.