Just as I have expected, US stocks were well bidded before and just after the release of the ISM manufacturing and New Home Sales data. The Dow traded as high as +60 following getting stuck in the negative zone (-80 at its lowest) as European stock indices were in a dour mood earlier today.
However, it retraced all gains and went back into the red (-20) at the point of writing, as I expected. But my order to sell at 9660 wasn't touched because it just fell out of the offer price. D*mn the huge spread. I got a feeling we won't close too much in the red today anyways (> -40 pts Dow), as buyers will eventually come into the market on bargain hunting, pushing up prices in this still illiquid market.
Well, its true that with these data, the US appears to be well on the cusp of emergence of recession. But then, so is the Eurozone.
So why the massive stock sell off today? Its because of the suspicion that stock valuations are getting ahead of themselves and that we may not recover as promptly as once thought, given the high unemployment in the US and the EZ. To recover quickly, consumption needs to recover at a good pace but that remains to be seen and u/e and credit flow are the bigger headwinds.
Still, the market is trading on news day after day while waiting for more volume/liquidity to return to the market to push us out of the current trading ranges we're seeing (in FX and stocks).
Have a good day ahead!
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