Monday, stocks fell in Asia 1.1% and 0.3% in Europe. Markets were closed in the U.S. Tuesday, stocks rose in Asia 0.9% and in Europe 1.4%. In the U.S., they closed nearly unchanged on moderate volume. Still, the Dow Jones Industrial Average did eek out enough gain to rise just above the 16,000 level. The VXO dropped 7% to close at 25.88 and oil continued its slide to end the day at 28.20. After the close, turkey-stock IBM reported another lousy quarter (despite creative accounting) and a worse outlook for 2016. I guess so if their tail-eating, buyback scheme loses steam from balance-sheet rot and rising interest rates and falling stock prices.
Wednesday, the carnage started in Asia where stocks plummeted 3%. In Europe, the loss was even higher at 3.3% for the day and already down 11% for the year. In the U.S. after falling much farther, stocks made a stunning comeback to recoup nearly half of earlier losses to close down 1.6% on strong volume. There was no explanation for the rebound. (“Pay no attention to the man behind the curtain.”) Many suspect meddling in the market from the PPT. Despite that, the VXO still shot up 10% to close at 28.47. The S&P 500 Index fell below support at 1863 mark indicating to me at least a big fall coming from there. Crude oil slid 5% to close at 26.76 and the 10-Year U.S. Treasury Bond yield fell 3% to close at 1.98. IBM fell 5% to close at 121.88 in reaction to their quarterly report the evening before.
Thursday, stocks fell in Asia 1.7% but rose in Europe 2.1%, and rose in the U.S. 0.9% on moderate volume. The VXO fell 5% to close at 27.17, crude oil gained 5% to close at 29.78, and the 10-Year U.S. Treasury Bond yield rose 2% to close at 2.02. Friday, stocks rose sharply in Asia gaining 3.5%, in Europe gaining 3%. and in the U.S. up 2.2% on moderate volume. The VXO fell 15% to close at 23.18 and crude oil shot up 9% to close at 32.25. The rally for the day nudged the Dow Jones Industrial Average above 16, 000 and the S&P 500 Index above 1900 providing a little breathing room above critical support around 1865.
I suppose if we were not aware of the Working Group on Financial Markets (aka Plunge Protection Team) we might view this massive move in oil and rally in stocks as a relief rally. My sense is these movements were orchestrated by some form of short-term manipulation. Without the QE and ZIRP policy Kool-Aid, the long overdue correction in stocks will likely continue. I expect these moves up to unwind in short order.