Binary Options Analysis – Investor Panic Sends Equities and Commodities Tumbling

SamTrader1

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Equities

The Bank of Japan intervened in the currency markets, pushing the USDJPY up to 80 from 77, which helped lift the Nikkei by .2%. The rest of the region skidded, as growing fears of a double dip recession and the growing European debt crisis weighed on investors. Korea’s Kospi dropped 2.3% and Australia’s ASX 200 sank 1.3% to a 13-month low. The Hang Send eased .5%, and the Shanghai Composite inched up .2%.

European markets tumbled as panic selling gripped the Western world. The FTSE and DAX fell 3.4%, and the CAC40 lost 3.9% The ECB said it was buying bonds in the secondary market in an attempt to stabilize the sovereign debt crisis, while acknowledging that ‘downside risks may have intensified’.

The Dow plunged 513 points to 11384, its largest drop in 2.5 years. The Nasdaq fell 5.1% and the S&P 500 tumbled 4.8% as a break of a key technical support level triggered massive sell orders. The VIX jumped to 31.7, climbing more than 30% in a single session.



Dow Drops More than 500 Points

Dendreon shares lost 2/3rds of the value, dropping 24.15 to 11.69 on troubles with its prostate cancer vaccine.

GM reported impressive earnings, but nonetheless fell 4.3%.



Treasuries and Commodities

Investors poured money into bonds, sending 10-year notes up 1 24/32 to yield 2.42%, and 30-year notes up an incredible 4 3/32 to yield 3.69%.

Commodities tumbled across the board, amid massive liquidations of positions. Crude oil fell 5.7% to 86.66, and gasoline tumbled 6.3% to 2.747.

Gold dropped 15.60 to 1650.70, while silver plunged 7.6% to 38.585. Copper closed down 2.4% at 4.2215.



Currencies

The Dollar surged against major currencies, as traders shifted to a risk-off mentality. The Australian Dollar was the worst hit, dropping 2.8% to 1.0464, while the Canadian Dollar fell 2% to .9802. The Yen settled at 79.1, down nearly 2.8% thanks to central bank intervention. The Euro fell 1.8% to 1.4104, and the Pound sank 1.1% to 1.6254.



Economic Outlook

Thursday’s powerful selloff across asset classes was reminiscent of the 2008 financial crisis, and if the European debt situation doesn’t stabilize, this trend may continue.

The ECB and Bank of England left rates unchanged, as expected. Weekly jobless claims were slightly better than expected, coming in at 400K, but nobody noticed.

Friday’s focus will be the non-farm payroll report. Economists are expected a gain of 89K jobs. A surprise to the upside could trigger a powerful rally, since investors are expecting the worst at this point, given the recent trend of weak economic data.



Binary Options Trading analysis written by Bradley Welcher
 

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