The biggest question we have here is where is the volume? Today’s session was solid price wise, but volume was well below average. Perhaps the institutional buyers are still on the sidelines waiting to jump back into the market, but for now they remain on the sidelines. In big bull runs volume tends to be heavy and above average. While it shouldn’t take this long, we are sticking with the current trend and until this situation changes we stick with the trend.
I would have loved to lead off with Europe, but it appears all the leaders are jumping into a pool yelling “Cannonball!” The complete lack of leadership over in the European Union is not surprising as they try to save their status quo. The market pundits will continue to be held hostage to the European situation and we’ll just focus on the price and volume action. Focusing on Europe at this point from our stand point is unnecessary and will not make us money.
The trend remains up for now barring any major setback where leaders and the market reverse in heavy volume. It would be silly to anticipate such a reversal now with the market above both the 50 day and 200 day moving average. While we don’t have the explosive moves from leading stocks we have enough confirmation this market can move higher. The important thing to note is to make sure you remain disciplined.
In two weeks we’ll get to see if the super committee will be able to agree on budget cuts. At the moment they are looking to cut 1.2T from the budget over a 10 year period. Given our current budget deficit is at 1.3T this year the cuts are meaningless. It won’t be too long before our debt turns into a similar situation like in Europe. A positive would be if the committee can actually agree to something regardless of whether or not it will do anything. Washington needs to get its act together and agree to what is best for America. However the market reacts to this news, we’ll be ready to take advantage of the situation.
Remain disciplined out there, stick to your plan and cut your losses quick!
