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The Dog Days of Summer are continuing.  This lack of volatility—30 days without a 1% move in the S & P 500 for 30 days which is the longest stretch since early 2014—is manifested in the market’s volume.  Dow Jones Newswire further wrote there has only been five days in the last thirty the S & P 500 has moved 0.5% in either direction, the fewest days since October 1995.

The SPDR S & P 500 ETF average volume manifests this lack of volatility as trading volume during the last five days is more than 50% below its 200 day moving average.  Is this a function that algorithmic trading, which represents 89% of NYSE volume, has waned considerably given such strategies are dependent upon volatility?  I think yes.

Personally I am enjoying this lack of volatility, believing such anemic activity will continue to after Labor Day.  Historically the markets are quiet the last two weeks of summer as many take a final vacation with activity increasing around the second week of September.

Will September be the inverse of the last 30 days?  Will all begin to fret about earnings, monetary policy and the election?

Speaking of monetary policy, FBR Chair Yellen talks later this week.  I think her speech will be a nonevent with the odds of less than 10% that something market moving will be made.

There was little I can write about yesterday’s market activity.  The averages were flat as oil declined following the sharpest rise in four years, partially the result of short covering,  As noted last week, short interest in crude during in the first week of August was the greatest since 2006.

On the other hand, health care issues rose on a high profile merger.

The 10-year was up 10/32 on fed comments that the economy is close to meeting the monetary authority’s goals and growth will pick up.  The dollar also advanced on these remarks.

Last night the foreign markets were up.  London was up 0.42%, Paris up 0.60% and Frankfurt up 0.70%.  China wasup 0.27%,  Japan down 0.61% and Hang Sang flat.

The Dow should open nominally higher on optimism that the economy is strong as policy makers debate the timing of the next interest rate increase.  The 10-year is off 5/32 to yield 1.57%.

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Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.