Uncertainty Looms


After an extremely volatile week in the US equities market, traders ponder what lies ahead as the year draws to a close.

Normally, a bit of increased volatility would be welcomed by most traders. Improved price discovery is always helpful, but lately, volume has been less than generous. Abysmal volume has forced traders to rethink their strategies and plan accordingly.

On top of existing issues directly related to the market, there are now numerous indirect problems that lie on the horizon. The European debt crisis appears to be getting worse, not better, and Congress seems unable to agree on numerous budget cuts needed to prevent the United States from hitting the debt ceiling. 

Another debt downgrade from a ratings agency would spell trouble for an already fragile market. Some traders believe that such a move is not priced in.

The bull market of October appears to have been short lived. With the Dow Jones Industrial Average well below 12,000 and the S&P 500 coming dangerously close to the 1201 level of support, traders have good reason to be nervous.

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