All of the markets started rallying at a bit before noon. All closed at or near their highs for the day. The QQQQs had a nice volume spike at the end.
I will add that today does feel like a technical bounce rather than the start of a new rally. Traders are conditioned to buy on the dips. In addition, no market goes down forever so some rebound is almost always in order after a large sell-off.
2 comments:
The NEW meltdown is phenomenally ugly and it is hard for me to envision a scenario where this is some sort of isolated case and the broader market will be able to shrug it off. Shares of NEW, NFI and LEND make a respective internet bubble look like a soft landing and even Enron took a few months to spiral to it’s death. Subprime loans account for $1.3 T of the $10 T total mortgage outstanding. How could this possibly not affect housing prices even though the subprime explosion happened AFTER the housing market already began to slide substantially;, AFTER HB’s had already shed 50% of their value? I think you are adding dynamite to the campfire at this point, and we haven’t even begun to see the effects of federal mortgage legislation kick in as a result of this because they haven’t been passed yet. Right now were counting on the bigger banks to sort of “self-regulate” themselves but you can tell they are nervous. Mortgage insurers and more traditional lenders are coming out of the woodwork to join the bending-over-backwards act currently on-going to assure the public how immune they are from this (while the big insiders jam their off-shore portfolios full of put options I’m sure).
Another thought I had is about consumer spending. It’s the same poor-credit folks who re-fi their homes every six months to use the cash for buying junk they don’t need that make up the bulk of the logistical cash flow of this so called “housing wealth effect” (citation needed). The increasing defaults and inability to re-fi that is hurting the riskiest credit worthy people is also taking the most significant dollars out of this effect, in my opinion. That has broader implications for the market as a whole, with consumer spending making up such a majority percentage of it.
Why are worlds markets moving in synchrony?
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