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Morning Market Briefing – Monday – 08/26/2013

Different week, same story, as the market hangs on to slight weekly gains you would almost think it’s a bull market again.  But internally, something has changed with the market.  The market climbed higher on low volume and sold off on high volume (when not halted or broken).

Monday long-term rates continued to rise causing the stock market to sink.  The major averages were mixed and flat lined much of the trading day.  Near the end of the trading day however, the robots started selling on no apparent news leading some to believe that it was a function of technical factors at work.

On Tuesday, the market was dead.  The morning started with excitement as a large number of trades outside the normal price range flooded US options markets in the opening minutes of trading, stemming from NYSE Euronext and spilling out to rival exchanges. The excitement quickly disappeared when it was apparent that Goldman was the trading firm behind the options trades that led exchanges run by NYSE Euronext, CBOE and Nasdaq OMX to say they were reviewing a few transactions. The resulting 100 million dollar lost by Goldman was apostlelized and busted.

Wednesday’s was the Bernanke free Fed meeting.  Unfortunately, the minutes did not provide to the market a clear-cut signal regarding the Fed’s tapering schedule.  To wrap up the minutes from the July meeting, there were little changes from prior statements.  The members indicate broad support for Chairman Bernanke’s timeline, which hinted for tapering as early as September.  However, this was seasoned with cautious comments regarding the labor market, “The June employment report showed continued solid gains in payrolls. Nonetheless, the unemployment rate remained elevated, and the continuing low readings on the participation rate and the employment-to-population ratio, together with a high incidence of workers being employed part time for economic reasons, were generally seen as indicating that overall labor market conditions remained weak.”

Thursday was another robotically challenged trading day.  The market started heading higher, than at 11:00 it started to sell off.  Than unexpectedly, the market halted for what seemed to be for no apparent reason except to prevent a sell off. For over 3 hours, no one could fix the problem.  Yet, an army of glorified TV economic advisors fixed the blame.  Some, blamed bearish bets on Apple, others blamed each.

Friday was, well, Friday.  Not much to say except extremely light volume climb.  No one wanted to trade, not even the robots.

Today, the market is opening slightly weaker.  Considering all the negative news out there (which should be interpreted as continued quantitative easing), I’m surprised the market is not up 200 points.  The US economic data this morning was weaker than expected.  In addition, our friends across the pond in UK confirmed that they too have a broken market which resulted in a sell off across European stocks, following a red close in the Nikkei225.  Seems everyone is waiting for the GDP number later on today.

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