Market Wrap Up – The Cat is Dead

Dead Cat Bounce

Volatility continues. After a 3% bounce on the S&P 500 (NYSEARCA:SPY) and a very respectable 3.6% bounce on the Nasdaq (NASDAQ:QQQ), the dead cat bounce that was today ran out of spring.

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It was once again the final minutes of trading that did the rally in, as the Dow Jones Industrial Average (NYSEARCA:DIA) crashed 3.3% in the final hour. It appears short selling traders are getting an early Christmas.

Oil also made a respectable comeback today, rising close to 2%, though oil stocks still saw the pain of the final hour collapse, as Exxon Mobil (NYSE:XOM) lost close to 4 percent into the close. Gold (NYSEARCA:GLD) and precious metals on the other hand did not respond positively to the sudden volatility at the end of the day, with the gold price ending the day down 1.2%.

All eyes will be on China (NYSEARCA:FXI) tonight, as trading opens in Shanghai in a few hours. The Nikkei had an equally volatile day yesterday preceding US market open, trading in a range of over 6% and ending down 4%. If the recent patterns continue, we should see a rise in the Euro (NYSEARCA:FXE) and corresponding fall in the US Dollar (NYSEARCA:UUP) along with a general collapse of emerging market currencies in the next 24 hours.

Finally, bonds got hammered today despite the negative close in equities. The iShares 20+ Year Treasury Bond ETF (NYSEARCA:TLT) is down 3.6% since its highs yesterday.

Given another poor close, look for stocks to open tomorrow gap down, and pressure on the Federal Reserve to call off any rate hikes to increase.

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