U.S. stocks rallied on Friday, but still down for the week, with sentiment boosted by falling crude oil prices and talks about Lehman Brothers may be acquired, while a speech by Ben Bernanke saying that inflation was on track to moderate in the coming months, triggering a rally in stocks on speculation the Fed will keep interest rates low for now.

The Dow Jones Industrial Average shot up 197 points, or 1.7%, to end at 11,628, but still posted a 0.3% weekly drop after being battered earlier this week on worries about the fate of mortgage giants Fannie Mae and Freddie Mac. The S&P 500 Index was up 14 points, or 1.1%, to 1,292 with a weekly loss of 0.5% while the Nasdaq Composite rose 34 points to end at 2,414 with a 1.5% loss for the week.

The CBOE Volatility Index (the VIX) a measure of fear in the market, was down by 1.01 point or 5.1% to end at 18.81. However, VIX futures are trading much higher, indicating that volatility traders expect are expecting higher volatility in September.

The VIX has been down for the past 6 weeks is now near the lowest levels since early June with support levels at 18.00 and 16.00 any increase in the VIX in the following weeks ahead could mean an increase in the market fears which will drive stocks back down lower as there are so much uncertainties particularly the ailing financials and high crude prices.

“The financial markets generally are unpredictable. So that one has to have different scenarios.. The idea that you can actually predict what’s going to happen contradicts my way of looking at the market” - George Soros

Popularity: 28% [?]

Don't want to miss a thing? Subscribe to my RSS feed!




You Should Also Check Out This Post:

More Active Posts: