No data, no volume

Today is almost a repeat of Monday: last night’s sunny Orient and more M&A chased short-coverers to push Dow to as high as 12290, almost back to the level of pre 031307’s slide. I could almost feel the “bids” from short-covering, particularly in PM session. Once I got my trades closed, I stayed aside, watching them scramble over each other in biding for shares, and there were almost no testing of lower ends for index today.

Index gains seemed not driven by institutional buys, as indicated by lighter volumes.

“Trading was moderate on the NYSE, with about 1.45 billion shares changing hands, below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 1.71 billion shares traded, below last year's daily average of 2.02 billion.” (reuters.com)

Monday’s volume was light, and today’s is lighter.

IBD’s comment on Monday:

“Stocks rallied Monday, but sharply lighter volume took the juice out of the session's gains.

The Nasdaq picked up 0.9%. The S&P 500 climbed 1.1%, the Dow industrials 1%. The small-cap S&P 600 also tacked on 1%. But volume receded 19% on the Nasdaq and nearly 30% on the NYSE.

Two factors weighed on Monday's volume. The lack of option-fueled trading certainly played a part. Big investors also were reluctant to trade heavily ahead of the two-day Federal Open Market Committee meeting that begins Tuesday.

Still, Monday's trading level came in below Thursday's tally, and was the second-lowest total since the last week of 2006, when traders stayed home for the holidays.”

There are possibly two reasons why “Big investors also were reluctant to trade heavily”

1.    Fed’s meeting

2.    FA side:

In a correction like this, bulls are on trial and burdens are on bulls to get the data to prove goldilocks are still in cards, and stocks are still worth “carry” at current level.

Consensus is that GDP will slow below 3%, but by how much? Earning’s growth will slow from double digit into single digit, but what is single digit, 5-7% or even lower?

Where would yield curve stay, shorter and long ends?

Bulls, just like Fed, are data dependent.

Before there is substantial bullish data coming out as a real buy signal, I guess bulls would not stick out their heads attempting any significant rally. 

http://marketreflections.com/