Sunday, November 21, 2010

Another wild week: markets zig down and then zig up

Last week, many markets moved down strongly on Tuesday, only to reverse in an equally strong positive direction on Thursday driven by a variety of positive and negative news. Investors, traders and speculators continue to react to 1) recent news headlines, such as European sovereign debt issues and concerns that economic growth in China may slow; 2) a broad array of economic statistics dealing with unemployment, consumer confidence, housing starts, foreclosures rates (some of which may be revised up or down at a later date) and 3) various technical indications: overbought, oversold, support, resistance, etc.

MY TAKE: Markets are likely to remain jittery with the economic news-flow driven by monetary and fiscal policy debates that include the assessment of austerity measures, entitlements cuts, and government bailouts; with an increasing focus on the future role of the U.S. Federal Reserve and central bankers. Expect volatility to persist.

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