Facing the Music

Monday in Asia and Europe stocks moved little. In the U.S stocks declined 0.3% on very light volume. Traders must have been buying something other than stocks on Christmas Eve. Markets did not trade Christmas. Wednesday, stocks in Asia closed flat despite Japan’s continued giddy rise over expected Bank of Japan monetary easing. After all, it worked so well for the past fifteen years, ramping up more of the same will give Japan just the boost that it needs. Stocks in Europe were nearly flat also. In the U.S., stocks fell 0.3% on very light volume. The VXO shot up over 5% to close at 18.64 as jitters build. The NASDAQ 100 Index again dropped below the 3000 level.

Thursday, Asian stocks rose 0.3%, while those in Europe did little. In the U.S., fear continued to build as evidenced by the VXO rising more than 14% to above 21 before collapsing near the close back to nearly 19. Stocks closed flat on light volume. What caused the big turnaround? John Boehner announced that the House of Representatives will reconvene Sunday. The drama continues. Friday, stocks in Asia rose more than 0.5%. In Europe they dropped a similar amount. Stocks in the U.S. dropped more than 1% Friday and 2% for the week, but the real story is in the VXO fear index. It blasted upward over 20% to close above 23. For the week, that’s nearly a 35% gain. The Dow Jones Industrial Average, following the NASDAQ, moved decisively below key 13,000 level, and IBM dripped below the 190 level.

Of course, Monday’s action will be driven by whether or not Congress and the President can agree to keep the gravy train rolling. If not, the likelihood of which is rising strongly, we should have a interesting trading day for the last day of the year. Have a nice weekend!

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