Monday August 22, 2011- The volatility continued on the street today. As the futures opened last night, the Libyan news hit the wires and the market yawned at the prospects of an end to the turmoil. Overnight the futures picked up steam as Europe opened and continued the momentum into the U.S. open, up as much as 200 points on the Dow futures. After a strong open, the market entered a basic trend down day, finishing at or near the lows, financials and energy being the worst performing groups on the day. The S&P 500 finished basically flat and the NASDAQ closed up 0.1%.
We see this day as more evidence that we are no longer in a bull market. Failed rallies are a trade mark of bear markets and todays move adds another to a long list in recent weeks. The surge in gold, which has gone parabolic, is more evidence of stress in the system. Generally parabolic moves end badly for those that enter the game late and this time will likely be no different. The only events that could support this action would be a collapse of a major currency or a return to the gold standard, both of which could be on the table.
Obviously the market is too erratic right now to warrant being fully invested. We remain on the defensive.