A sluggish start for stocks did not last too long as buyers began to pour into the market. Unfortunately for longs buyers did not stay around long enough to hold the intraday gains. Volume was up across the board with NYSE volume up more than 17%. NASDAQ volume was higher, but only by a small margin 2.5%. Not exactly the sign of institutions pouring into stocks trading on the exchange. Perhaps most disappointing is the lack of interest in small cap stocks. The Russell 2000 continues to lag well behind the broader market averages. Money continues to funnel into large cap stocks. Today’s action was not extremely terrible, but it was far ideal. This uptrend is hanging on by a thread.
The next two charts are a good indication of how the economy is doing. Nothing is more telling of how an economy is performing than commodities and goods shipped. We are in a digital age and these are not what they used to be like, but they are still pretty dang good. At this point neither indicator is showing a strong economy. The markets will need to continue to see support from central banks to keep prices where they are. It sure isn’t the economy boosting stock prices.
By simply following price action we do not need to interpret how lower commodity prices will impact stock prices. We are sure there is some sort of correlation, but why mess with something other than price. Follow price trends and avoid trying to guess how the market react one way or another.
Wednesday afternoon we will see the latest Federal Reserve meeting minutes. I am sure some fireworks will appear as the minutes are released. At this point, what do we not know? Futures markets are pricing in a rate hike at the next meeting. We do not see how they spoil Christmas, but hard to argue with futures traders. Price is everything and right now it appears the Fed will act in December.
This is a tough market. It is not for the weak minded. We continue to find opportunities intraday and still getting end of day signals. Go figure. We will act as signals are produced. Cut your losses short and ride your winners.
