Today’s market action relates to
trying to find stability after the crushing negative performance of Friday’s
market. Market open seemed to indicate
minor conviction, but soon all indexes turned slightly negative. Gold and oil were down slightly as well. Interest rates continue to drop. Volatility is stable, but slightly
higher. We think that the Federal
Reserve Bank might come out with another round of economic stimulus
shortly. It is only a matter of time
until the dramatic drop in the price of oil shows up at the gas pump, giving
consumers a much needed break. The oil
drop should function similar to a tax cut and result in economic stimulation
over the next few months. Between
historically low mortgage interest rates, a significant drop in gas prices, and
a possible QE3 or 4 program (depending on how you classify ‘Operation Twist’)
we don’t see this market swoon lasting for more than a few weeks.
