US markets in crisis?

As we do every Sunday, we try to read the past week’s aggregate data of the most important international indexes, with a more specific look at the Italian index (MIB).

What happened this week in the markets?

Let’s go in order.

Monday was a public holiday for the United States. This may have benefited European markets, which started very well, with rises of even more than 2 percent. With the reopening of Wall Street on Tuesday, we witnessed a general sell-off that drove markets lower.

On Wednesday, however, a technical rebound, especially for the NASDAQ, tried to make the indexes recover, only to continue the descent both Thursday and Friday. We have seen days where we would go up in the morning and in the afternoon we would go down until the climb was completely erased.

This is a symptom of high volatility in the markets, and I believe that in the coming weeks, until at least after the U.S. elections, we will have to get used to seeing the market so volatile and unstable.

The DAX, bucking the trend of slumping U.S. markets , managed to hold on to positive territory this week (+1.30 percent), compared with the U.S. S&P500, which lost nearly 5 percent. On Thursday, Christine Lagarde (ECB) spoke, stating that the ECB would not change the interest rate (for the time being). The ECB intervention certainly did not affect the rise, as the DAX on Thursday and Friday had no decisive movement. Unlike the U.S. indexes, however, it has managed to hold around the initial levels of the beginning of the week even with some small increases.

So, was this an “all-American problem”? Here are the performances of the most important indexes:

US markets in crisis?
Source: WEBANK’s T3

As we can see, the NASDAQ this week lost 7.57 percent, which when added to last week’s -3.20 percent, exceeds a 10 percent drop in two weeks. Also underscoring the slumping U.S. markets are the performance of the S&P500 (-4.76 percent) and DowJones (-3.45 percent) indexes.

Is it a collapse? Consider that from April to August it went up 60% (from 7500 to 12000). Returning to 11000 losing 10% may be a market retracement. If it were to fall further, clearly a collapse could lie ahead. But the Nasdaq and other indexes will be better and more timely analyzed by Matthew and Mark in upcoming webinars.
What we can say here, with this data, is that the DAX and Europe, for this week though clearly affected by the performance of the U.S. indices, tried to hold, also aided by a day of blocking of the U.S. markets, where the DAX performed well.

The DAX then closes the week with +1.5 percent and the EUROSTOXX and MIB virtually unchanged. Of note, the Japanese index (NIKKEI) continues its two-week climb (this week a good +2.38 percent) and a stop by China with the CHINA A50 index losing about 3 percent, aligning with U.S. markets.

Performance from Sept. 4 to Sept. 11 of major financial indexes

Volatility has been very high, especially in the intraday, but if we calculate the VIX weekly it is down 12 percent, although that tells us little. It may simply be that volatility in the last few trading days has been lower than in the first few days of the week or Friday, September 4.

What happened this week at MIB?

Let’s take a look at our index. As we said, the MIB remained stable, although on Monday it made a nice jump up but, later adjusted to international markets and fell in the following days.

Here are this week’s top 10 performance rankings (MIB):

11/9 quotationquotation 04/09Var %
Fiat Chrysler Automobiles9,9149,45634,84
Banco Bpm1,4811,41744,49
Pirelli & C3,8813,71444,49
Source: Borsaitaliana.com

The usual ranking of the performance since the beginning of the year of MIB stocks tells us once again that the “recovery” of the MIB is very slow. Only 13 out of 40 companies have a positive performance since the beginning of the year. Of note is the run of NEXI, which from third well behind first place, now finds itself second within a step of overtaking DIASORIN. We will see if we find it in first place in the MIB next week.

As we have said, turbulent weeks lie ahead, and market indecision is strong, plus volatility has also been widely evident in the intraday. Good trading will take good knowledge of techniques, cool heads and a lot of patience. If you are not prepared, it is better to refrain to avoid losses later difficult to recover.

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