Has Confidence Eroded?
The Nasdaq halted trade for 3 hours yesterday due to a technology glitch. If it had been a really busy trading day I think there would have been even more outrage. But on a slow summer trading day, we aren't hearing a lot of stories about investors who got hurt.
The big question is what would it mean for confidence? When the markets reopened, they didn't plunge as some feared? And this morning after folks have had more time to study and digest the issue, markets are higher in the early going. So maybe this will be a wake-up call for Nasdaq but won't be a bigger issue overall.
In economic news, July new home sales plunged -13.4%. This was well below estimates and is weighing on the homebuilding sector.
The 10-year yield is lower today and helping to boost beaten down interest rate-sensitive sectors.
Asian markets were mixed overnight. A research in China said that the country may once again face liquidity issues in the second half of the year.
Europe's markets are also mixed. Germany's GDP rose 0.7% and Great Britain's GDP was revised higher to 0.7%. German Finance Minister said the Greek economy may enter expansion next year, but is still likely to need a small new aid package.
Trading comment: The bounce in the market yesterday might have to be asterisked since we don't know what true volume would have looked like. Today, the S&P 500 is back above its 50-day average but just barely. This is an important area of resistance. If the SPX can regain this level convincingly then it would argue for a continuation of the rally. But if it fails again and cannot retake its 50-day then that would mean we are likely in store for more of a correction. We are placing a higher probability on the latter, but as we know anything can happen in the market so we are trying to remain patient. Have a good weekend--