The U.S. stock market: a storm is just beginning

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The DJIA fell to a minimum from July 9, to region 24580 points. On the eve of the sale deprived the index of 2.4% by weight. For last month it already the third large-scale attempt to reduce the overbought on the us stock market – the sale of 10-11 October was even deeper, however, after investors bought back the sale.
The Nasdaq-oriented high-tech sector, sank on the eve of 4.5% that became the most powerful day collapse in seven years. On the one hand, down the index pulled quite objective reasons: after the release of weak report AMD paper chipmaker has fallen by a quarter. On the other – the volume of stock exchange’s liquidity is clearly becoming less.
It can be assumed that only the begun season of the corporate reporting in the United States will bring good news – the third quarter was at least interesting. However, it should be noted that financial flows issuers become more restrained and the Outlook is cautious.
The Federal reserve system of the USA for a year sells securities from its balance sheet, previously accumulated in the course of the long process of QE. Gradually increases the amount of treasuries in circulation, because the Ministry of Finance continues to place new bonds, but they are not excessive demand. In November, the fed will have to repay a significant amount of US Treasuries, that is, the process of absorption of dollar liquidity will be removed from the market about $60 billion to the Treasury takes more dollars than before, because I need to work with the budget deficit. This means that the “dollar vacuum cleaner” will only gain power as contributing to strengthening the position of grinbek, and to decrease the amount of free liquidity on stock exchanges. Clearly the market is becoming increasingly fragile.
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Anna Bodrova,
Senior analyst,
Alpari