Monday, stocks in Asia lost 0.6% as the Nikkei led the way down with a 2% loss which put it down over 10% from its recent peak and put it in technical correction mode. Stocks in Europe, suffered a 1.4% loss. In the U.S. losses accelerated. Stocks fell 2.3%, with the S&P 500 Index losing over 40 points that Dow Jones Industrial Average shedding over 300 and the NASDAQ declining over 100 to drop below 4000. Volume was low moderate. Precious metals gained over 2%, but their miners marked time. The VXO shot up over 13% to close at a nearly neutral 19.77 while the 10-Year U.S. Treasury Bond yield dropped more than 3% to close at 2.58%.
Tuesday, stocks in Asia closed down 2.4% as the Nikkei fell about twice that amount. In the U.S. Wednesday was a testament to the statement that old ways die hard. So called, investors, snapped up “bargains” and ran the markets up about 0.8% on low moderate volume. A reflection of that sentiment, the VXO nearly reversed the move of the day before to close at 17.59. The 10-Year U.S. Treasury Bond yield rose 1.7% to close at 2.62%.
Wednesday, stocks in Asia followed the lead of those in the West and rose 0.7%. In Europe, stocks marked time as they also did in the U.S. on low moderate volume. The VXO did drift up 5% and the 10-Year U.S. Treasury Bond yield rose 1.6% to close at 2.67%.
Thursday, stocks in Asia rose 0.4%. U.S. stocks shot up for no particular reason other that a remark by Draghi about more BOJ QE. In Europe, stocks closed up 1.4%. Stocks in the U.S. moved up stongly also, rising 1.3% on low moderate volume. The VXO fell 11% to close at 16.56, while the U.S. Treasury Bond yield rose 1.3% to close at 2.70%. The gains of Tuesday and Thursday had nearly erased the losses suffered Monday.
Friday, stocks in Asia continued the strong positive trend from the West, rising 1.1%. Stocks in Europe and the U.S. continued the party climbing 0.8% and 1.1% respectively on low moderate volume. Precious metals miners gained about twice that and the VXO plummeted 15% to close at 14.07. The employment report was not particularly encouraging. In face, there was no particular news that would explain the latest euphoria other than perhaps the previously mentioned hope for further QE from Japan and associated carry trades.
With Monday’s move cancelled by those of the following three days, Friday’s move defined the action for the week. The week was characterized by another dip bought. The game of musical chairs continues.