An unusual week just ended. Good news developments occurred (inflation numbers tame, jobless claims down, housing remains very strong, bond yields cooled a bit, vaccinations increasing strongly = not unusual market pluses). Nevertheless, bad news developments occurred (ship stuck in Suez Canal blocking world supply chains, gas prices rising fast, COVID cases rising fast = not unusual market negatives).
What was unusual was the last 8 minutes of trading on Friday. Obviously, price discovery for equities represents the net result of investor assessment of the impact of the disparate factors swirling around each moment, further impacted by investors’ desire to take profits, stop the pain from losers, or establish new positions. And to help them divine the future of equities interesting them, investors look to “fundamentals” and simple or esoteric “technical” indicators. All the analytical tools and market axioms have their supporters and detractors, but one unusual development from Friday’s trading strikes me as possibly especially significant. It involves the market axiom that says “the price the investor is willing to take home with him is a very important price.” That’s especially true at the end of a day’s trading, and even more so at the end of a week’s trading, since after Friday’s close, the investor will have to live through the weekend unable to make position adjustments in the face of a blockbuster development before the markets re-open on Monday. With 8 minutes to go before the close of trading on Friday, the day’s trading turned very bullish and added 150 DOW points to finish the day up 450 points… including a record close for the S&P.
Well, the markets will surely be going up and down next week, as always, and there are no guarantees, but Friday’s final minutes’ performance can certainly be viewed as a major contributor to the bull case.
In terms of this week’s market condition, we used the high volatility settings to scan the conforming credit spreads. Premier Members can view the screening reports of conforming credit spreads, and others can join us to test-drive free for 30 days.