Volume Drops to the Lowest Level on the Week with the Dow extending its Win Streak to 9 Days

A surprise uptick in consumer spending helped boost the market in the early going. Advanced retails sales jumped in the month of February by 1.1% (seasonally adjusted) much more than the expected .5%. Import prices rose 1.1% more than the expectations, but retail sales overshadowed the higher prices. Another early morning dip was once again found support as buyers stepped up to push the market to the highs of the session. Volume was lower than Tuesday’s level and it was even lower than Monday. Monday’s are notorious for light volume days and to see such a light volume day on Wednesday is not normal. We aren’t going to argue with the market and if it wants to reach these heights we are okay with it. To quote Buzz Light Year: “To Infinity and Beyond!” What was interesting about the retail sales figures is in order to get the jump in the number the government had to “seasonally adjust” the number. Actual sales fell on the month! Gas stations were the biggest benefactor of consumer spending in the month of February. With gasoline prices as high as they are it isn’t that hard to figure out this is where the consumer’s cash is going. Tomorrow we’ll get to see more Jobless Claim figures as well as PPI figures and endless squawking over the state of the economy. Volume has been low and we have certainly pointed this out to you. Options expiry weeks tend to have inflated volume capped off with Friday’s seeing tremendous volume. We do find it odd during an option expiry week we simply do not have the volume. Sure some of the stock trading volume has moved to options, but can it explain all of the volume loss? It is an interesting question and one that will not help your trading. However, it is still interesting to ponder where the heck everyone went! This market is in an uptrend and the small gains we have experienced since e last week’s follow through has frustrated many. We may have turned a new leaf and these types of gains are the ones we should expect moving forward for uptrends. No one knows, but the important thing here is to remain disciplined and do not try to be a hero. Cut your losses.

Stocks End Mixed as Volume Slips

Volume continues to back down from Tuesday’s level and stocks continue to hang in a holding pattern digesting the recent gains. We did get a bit more economic news showing Jobless Claims were less than expected and wholesale inventories fell. It will be nice when claims figures show job creation rather than continued job losses. Most economic news is for cocktail parties and not for trading or at least not for our style. After the Europe close EURUSD took a dive sending our markets to the lows of the session. Buyers were able to step up and support the market pushing prices back to near the highs of the session. Volume dropped more than 10% across the board, a clear sign institutions backed away from the market. We continue to see this market move sideways consolidating its most recent move. There just something not right about this market despite our continued rally. We are not about to argue with the market and fight it. Something just doesn’t feel right out there, but this is precisely the reason we have a cut loss strategy. Just because we may feel one way or another we could be dead wrong! We will not compromise our strategy because our feelings. Opinions are very dangerous and most often they keep you from squeezing every last bit from the market. We’ll stay with cash and a few long positions. Price will dictate our next move in either direction. Sentiment continues to be dominated by those who are neutral. The number of bears did slip to 27.35% according to the AAII sentiment survey. However, only 36.47% of respondents were bullish! How can this be? There are lots of reasons, but when the market appears to want to crack wide open rumors of Fed or ECB action always brings in short covering. It is what it is and fighting the tape is a futile effort. There are lots of reasons to be bearish and very few to be bullish, but when you boil it down all that matters is where price is moving. Tomorrow morning we’ll get a reading from Import prices and the release of the monthly budget statement. Like others, we are looking forward to the weekend. Make sure you get out there and enjoy the weekend.