Thursday, September 03, 2015

Friday expected to be another volatile market day

It is not expected that Friday's payrolls report will be anything of note by any long term measure.  In the short term, as in tomorrow, any variation from the expected results or even just meeting expected results will be watched and acted on, especially if the report comes in even a smidgen on the downside.  This is a defensive market.  That's unfortunately not news.

One troubling report by JP Morgan research released today suggests that activity by quantitative market trading funds looms over all trading.  The analyst suggested that $100 billion in stock remains to be sold at those funds in the next couple of weeks. How he knows this is not clear. Is it just a guess or is it based on prior knowledge of trading plans by firms. In any event, these trading algorithms are completely price insensitive and not conducive to a market based on fundamental analysis.  That is why the word "troubling" was used.

Going into a three day weekend will likely exacerbate any negative sentiment if that is what the jobs report gives the market.  The risk is that the market will react by letting their fear take over, with the thought that they can always buy next week and not worry about what Asia and Europe will do on Monday.  Then again, the real analytical investor market could decide that they want to get ahead of the end of what most of us view as summer, and buy opportunistically.

No tarot cards here.


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