Optimism over bureaucrats coming together and compromising on deals certainly has had Investors smiling as of late. The most recent move from last Friday’s has been quite dramatic. Last week when US lawmakers came forth to speak of a deal on the Fiscal Cliff was reachable the market responded. Normally with snap back moves we’ll see a bit of institutional buying pushing volume above average, but with Thanksgiving we didn’t see volume jump. Today’s rally came will be on lighter volume due to the shortened session, but even the volume run rate showed volume had a hard time keeping up with Wednesday’s level. Despite the strong gains we still have not confirmed a new market rally and remain in sell mode.
It is hard to take too much into this week’s action given the light volume and holiday. Light volume makes it quite easy to push the market one way or another…as the old saying goes: “never short a dull market.” This week was one crushing blow to those who are long volatility and short stocks. Next week we’ll head back to normalcy (QE Trading) and we’ll see if this market can confirm a new market rally. Congress is back in session and the market will be pounded with headlines over a potential fiscal cliff deal. I fully expect to see optimism heading into the start of next week. After that, it is hard to say talks will go smoothly considering past performance on negotiations.
We hope everyone enjoyed the holiday yesterday and the light holiday trading this market provided for the past week. Get out there and enjoy the weekend!
