October Lows Hold As Stocks Try to Rally
Possible upswing on the way.
Bryce Knorr
Published: Oct 28, 2008
Big swings on Wall Street remain the rule, but the pendulum may be ready to try for at least something resembling a sustained upswing. After making a new low close on Monday thanks to a late burst of selling, stocks held Oct. 10 lows overnight and are set to rally sharply on the open this morning.
Monday's turnaround came after the market plunged early after selling kicked off the week in Asia and Europe. Stocks were cheered by another report of better than expected housing data, which helped prices turn around and move higher until the last hour of trading. That's when mutual fund redemptions typically are made, and it looked like buyers were mostly absent, sending prices into a tailspin.
Monday's weakness in Asia stemmed in part from troubles in Japan, where stocks made a 26-year low. The trouble was mostly caused by a sharply higher yen, which gained because traders and investors are unwinding the "carry trades•bCrLf put on over the last six years. That trade involved selling yen due to low Japanese interest rates and buying anything else, from emerging market debt to commodities. Japan's industrial economy is highly sensitive to anything that might hurt its exports, and benefited from the weak yen. To read Bryce Knorr's complete weekly financial review, click HERE.
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