Market Commentary SEP.25.2014 The U.S. equity market tumbled - TopicsExpress



          

Market Commentary SEP.25.2014 The U.S. equity market tumbled today. Nasdaq and S&P 500 lost 88.47 points (-1.94%), and 32.31 points (-1.62%) respectively. On the other hand, 10-yr US Treasury yield declined to push up the price by 2.44%. It is somewhat difficult to find a specific reason for the today’s sell-off of risky assets. The most probable suspect is potential slowdown of the global economy. Throughout this week, the market has been reactive to China’s inefficient stimulus package and weak Eurozone economy. The market recovered by a small margin on Wednesday, but this seems like a technical bounce back from the massive sell-off of previous days. From lowered yields on Eurozone government bonds we could see that the market is worried about further Eurozone recovery slowdown, and this could be a reasonable explanation for the today’s sell-off. To briefly follow-up the team’s volatility positioning strategy, VXX finished 6.19% above the yesterday’s closing price, since CBOE VIX was up 18% today. The team’s technical analysis suggests that the today’s closing price of $30 per share is a reasonable near-term target price. There could be a follow-up rally for next few days up to $32~$33 per share, but the risk-reward dynamic is no more attractive as of this moment. Sep Nonfarm-payrolls, which will be released on next week should be closely monitored, since a stronger-than-expected NFP could be a significant catalyst to further drive up the volatility prior to the FOMC’s monetary tightening in a near/mid-term perspective. logicalinvestment2014.wordpress/market-issues/sep-25-2014/
Posted on: Fri, 26 Sep 2014 03:30:23 +0000

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