Spurred by Chinese currency and economic slowdown concerns, the major U.S. markets have dropped rapidly and dramatically, busting the S&P 500 out of the range that has held since February. Lows not seen since the correction in October were retested and held, followed by a strong bounce to the upside. Economic news stateside has been sparse and moderately positive. There were even hints from the Fed that a September rate hike would be premature, so after several down days in a row, there is finally a relief rally that appears to have legs. Using options to mitigate risk and also capitalize on the new big winners presents huge opportunities for experienced traders. Get your edge by clicking here: http://www.optionsuniversity.com/oua-starter/
The CBOE Volatility Index (VIX) rocketed briefly all the way into the 50’s after wallowing mostly below 20 for the last several months. After the recent strong market rally, it has settled back down around 30. It is unusual to see huge swings in volatility in August, and additional swings between now and October would fit the typical seasonality, especially for the 7th year of a Presidential cycle.
OVERSEAS: With a little bit of help from the Chinese government, stock markets in Asia are rebounding big time. Shanghai leading the way in overnight action, up over 5%, as all major markets are broadly and strongly up. This is having a ripple effect in Europe across the board with the DAX up over 3% and the FTSE up over 2%.
OIL: After a brief increase last week, oil inventories have resumed their gentle decline. Nonetheless, crude oil prices continued to decline as both inventories and production remains at globally high levels. Current WTI Crude is now at less than $40 per barrel, closing at $38.60.
JOBS: The latest weekly jobless claims came in roughly as at expected with 271K new claims. Perhaps even more important to the jobs outlook is that the GDP number came in better than expected at 3.7% growth vs. an expected 3.2%. Consumer spending and confidence both appear to be on the upswing.
HOUSING: New housing remains strong, up 5.4 percent to an annual pace of 507K. Supply remains very tight.
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