Whip-Saw Trading Action

Daily Market Commentary for August 12, 2011

Markets provided extensive whip-saw trading action throughout the final trading day of the week. (read more at Millennium-Traders.Com)
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Into early afternoon trading, the DJIA was holding steady with a triple digit gain. Traders were busy monitoring the S&P 500 index futures for the next key level of support resistance of 1,070. If it strikes before the end of the session, traders are prepared to another bloodbath in the financial markets. Investors are extremely nervous and as seen over the past week, are capable of panic attacks that slash any rally attempts even contemplated on Wall Street. The VIX indicates the markets are in for heightened volatility over the foreseeable future.

While word of short-term ban of short selling on European markets received no reaction from traders in the U.S. markets - should the rumor even remotely begin to circulate for the U.S. markets - we could experience yet another series of panic in the financial markets. The EDHEC-Risk Institute blasted four European nations for their ban on short sales saying the restriction could have unintended spillover effects. The Institute said that short-sale bans can reduce liquidity, increase volatility, and reduce market quality. They continued that, short sellers are important contributors to efficient stock price, that short interest contains valuable information for the market, that information is impounded faster and more efficiently into prices when short sellers are more active and that short sellers change their trading around extreme return events in a way that aids price discovery.

Commerce Department reported Retail Sales data showing that July 2011 retail and food services sales were up 0.5% from June at $390.4 billion, and up 8.5% from July 2010. Excluding autos, retail and food services, sales during July were $323.6 billion, up 0.5% from June and up 8.6% from July 2010. The Commerce Department additionally reported that consumers spent more money in July, in the largest one-month gain for retail sales since April.

University of Michigan reported Consumer Sentiment Index reportedly dropped to 54.9 in August compared to 63.7 in July, striking the lowest level seen in 31 years. That means that it was worse than any time during the Great Recession. August expectations barometer dropped to 45.7 from 56 in July. The gauge of current economic conditions fell to 69.3 from 75.8 with the one-year inflation expectations holding at 3.4%.

Business inventories for June were $1,518.5 billion, up 0.3% from May and up 11.1% from June 2010. Sales were $1,187.8 billion, up 0.4% from May and up 12.4% from June 2010.


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