Spent 4 days away upstate to recharge batteries and kept market checks to an absolute minimum. I thought i would start the day with a fresh look at the volatility index and if you look all the way back to 2008 you will be reminded that the index traded up in the high 80s during the Lehman meltdown. So while the recent drops have been quite painful, be advised that they could get even worse if the markets begin to smell out another recession or if we have a major institutional melt down.
Meanwhile it appears that 10,600 is holding for the time being as evidenced by the dow bounce last week to 11,500 and then the pull back to 10,800, and then yesterday's run up back to about 11,200. MLPS which have had a better bounce from its 310 low looked like they were about to sink into oblivion Monday with a nearly 9 point index loss. The index got it all back yesterday so for the week we are up on the dow and break even on mlps.
Going foward i think much depends on what happens Friday in Jackson hole. The market is expecting perhaps another QE but i sincerely doubt it will happen. My guess is that the markets are setting up for more disappointment and that no matter what Bernake says (unless he plans to give everyone a million bucks) we're headed lower. MLPS will be no exception in any downdraft though a 1 handle on the 10 year is probably going to lend some support. However if selling gets serious, in the end sellers have to sell something, even if its something thats growing payouts every quarter. When you need cash and you've sold everything else, you start selling grandma's jewelery.
This morning we have stock futures lower by about 10 S&P points ahead of the open. Crude and nat gas are a little lower. Hurricane Irene is an east coast threat so there isn't much of trade here from that standpoint. Rates are a little higher but still hovering near all time lows. Frankly i would not trust any rally unless we see something substantial happen as far as yields go. Trading near all time lows and the 10 year yield barely off its low is not something that inspires confidence.