Slow Markets Post Hurricane Sandy
Posted by Michelle Heath in Announcement, tags: allocation, alternative asset, Forex, investment, managed account, portfolio diversification, social trading, trading
Tuesday, October 30, 2012 marked the first time since 1888 that inclement weather conditions caused an NYSE shutdown for two consecutive days. Curious speculators wasted no time in coming up with a myriad of possibilities as to which condition exactly was causing the exchange’s dormancy. An entertaining DailyFinance article even mentioned amusing, yet erroneous, Internet reports claiming the trading floor had been flooded.
In an industry where news is one of the key players affecting market movements, predictions of where stocks would go on the (re)opening day of trading on Wednesday October 31 ran both bullish and bearish. An article published on CNN Money seemed to take more of a bullish stance and anticipated very high trading volume due to a two day back-up of buy and sell stock orders.
On average, 3.5 billion shares are exchanged each day; multiply that by two and how could trading not rush aggressively out of the gates at the opening bell?
But, much to everyone’s surprise, markets didn’t explode into a vigorous fury of trading. Instead, they resumed business as usual, ending relatively flat on at the end of the day Wednesday. Major indexes reflected the apathetic performance, with the Dow Jones and NASDAQ losing 11 points, and the S&P climbing less than a point.
Early yesterday morning, Thomson Reuters Senior Forex Analyst John Forman offered some pretty spot-on comments on the forecasts:
“My initial reaction is that while yes there is likely to be some uptick
above normal volume due to pent up need for trading, it’s probably not going
to be as much as the article makes out. Barry Ritholz points out some
reasons to expect it not to be a particularly huge day:
http://www.ritholtz.com/blog/2012/10/make-believe-nyse-opening
I think the whole month-end/year-end (mutual fund) thing is likely
overstated given that good shops would have anticipated weather-related
issues with the NYSE and done their major business last week. That really
just leaves folks reacting to how the futures have traded the last couple
days and the impact of Sandy on certain stocks.”
So where do we go from here? In terms of futures as John mentioned, stock indexes have been on the rise this morning after the release of a positive ADP private sector employment report and optimistic jobless claims.
In my opinion, it all depends on how you’re monitoring the markets. Fundamentalists might assume a long position on index futures, anticipating gains as a result of tomorrow’s presumably positive US Labor Department’s October Jobs Report. Bloomberg reports jobless claims decreased by 9,000 to 363,000 while Reuters reports October ADP private jobs up 158,000.
Technicians, on the other hand, might take this building rally as a bearish indicator, and short index futures.
It will be interesting to see tomorrow’s settlement prices at the end of the day post Job Report. Stay tuned!
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