The most serious damage yesterday was done in the many markets whose charts follow as investors are scrambling away from risk, wish to lock up profits, believe there will be global economic contagion from U.S. weakness and that demand for commodities will lessen.
Well, there’s always more to do but there are three things to be watchful for now: options expiration on Friday, a Monday holiday and a surprise [not so much now] interest rate cut. You can rest assured Friday could be very volatile with a holiday on Monday. There is little question the Fed is working the phones in frenetic fashion trying to fashion a strategy to pump markets and confidence higher.
It has often been the case historically that if a Friday close prior to a long weekend is higher or lower, the following Tuesday will follow-through in the same direction. If the Fed does something aggressive on Friday, for example, expect that condition to become exaggerated Tuesday.
Investors are scrambling out of previously hot sectors and into cash, it seems, since few sectors responded well Wednesday. And, no, I don’t think they were seeking “safety” in financials yesterday.
Depending on conditions today I may not post since there may be contradictory developments Friday. Markets don’t go down or up in a straight line but this market in general is in trouble.
Have a pleasant day.