WEEKLY SUMMARY
The market was generally down this past week. All of the major metrics (Dow, S&P 500, NASDAQ, and the Wilshire 5000) were down except the Russell 2000, AMEX and the VIX. The VIX was up 8.5%, which marks two strong up weeks for the VIX. The rising VIX suggests increased volatility in the market in the next month, but increased volatility presents greater opportunity for profitable options activity.
The Dow hovered near the 12,000 level for most of the week. On Friday we experienced a strong down movement starting at 9:50 am and continuing until 12 noon. The Dow closed down 166 points as seen in Figure 1 and Table 2. This negative movement in the DOW was probably due to the political unrest in Egypt, and several less than expected earnings reports, most notably Ford. The situation is of interest to us for several reasons, but especially since we currently hold an ETF (GAF-SPDR S&P Emerging Middle East and Africa), which invests in equities in the middle-east including Egypt.
Figure 1: Dow Jones – 28 Jan 2011
The summary of major market metrics for the past week can be seen in Table 1. I am also including a table showing market behavior on Friday, 28 Jan 11. Table 2 clearly shows Mr. market’s irrational behavior. It would be very difficult to make a case that this market movement is anything other than reaction to uncertainty caused by the unrest in Egypt and the general mood in the Middle East.
Table 1: Summary of Major Market Metrics
| Last | Now | % | ||
| Index | 21-Jan-11 | 28-Jan-11 | Change | Change |
| DJIA | 11,871.84 | 11,823.70 | -48.14 | -0.4055 |
| S&P 500 | 1,283.35 | 1,276.34 | -7.01 | -0.5462 |
| NASDAQ | 2,689.54 | 2,686.89 | -2.65 | -0.0985 |
| Wilshire 5000 | 13,499.30 | 13,450.79 | -48.51 | -0.3594 |
| Russell 2000 | 773.18 | 775.4 | 2.22 | 0.2871 |
| AMEX | 2,125.88 | 2,140.29 | 14.41 | 0.6778 |
| NYSE | 8,105.75 | 8,062.64 | -43.11 | -0.5318 |
| Vix | 18.47 | 20.04 | 1.57 | 8.5003 |
| Crude Oil | 89.10 | 89.49 | 0.39 | 0.4377 |
| US$/Euro | 0.7423 | 0.7305 | -0.0118 | -1.5897 |
| US$/Yen | 83.0293 | 83.02 | -0.0093 | -0.0112 |
| Pound/Yen | 131.9427 | 132.0516 | 0.1089 | 0.0825 |
| $Index | 78.11 | 78.15 | 0.0400 | 0.0512 |
| Gold | 1,344.00 | 1,316.00 | -28.0000 | -2.0833 |
Table 2: Market Action on Friday, 28 Jan 2011
| Friday | Friday | |
| Index | Change | % Change |
| DJIA | -166.13 | -1.3856 |
| S&P 500 | -23.2 | -1.7852 |
| NASDAQ | 0 | 0.0000 |
| Wilshire 5000 | -257.14 | -1.8758 |
| Russell 2000 | -20.03 | -2.5181 |
| AMEX | -26.14 | -1.2066 |
| NYSE | -144.42 | -1.7597 |
| Vix | 3.89 | 24.0867 |
Notice that the VIX was up 24% on Friday.
