Inability For Markets To Rally Higher Is A Bad Sign
Once again, the major stock indexes rallied higher after a quick decline in the first hour of the trading session. This same pattern seems to be repeating nearly every trading day since late December 2011. Many traders and investors are now looking for this pattern to occur on a daily basis before the noon hour.
Once again, the major stock indexes have found a low by the noon hour and then floated higher into the afternoon. Nearly everyday we see the same pattern repeat over and over. The trading volume remains extremely light which generally favors the upside in the stock market. Traders must remember the old market adage that states, never short a dull market.
Nearly every trading day the major stock indexes will decline before the noon hour. This decline in the major stock market indexes usually leads to a light volume rally that lasts into the close. For example, yesterday the major stock indexes dropped sharply lower at the open only to find a low after the first hour and trade basically unchanged by the closing bell.
Light Volume And The Falling U.S. Dollar Keep Markets Buoyant
Nearly every trading session over the past month the major stock indexes rally after an initial morning decline. Some investors may view this action in the market as a sign of strength, however, the trading volume remains extremely light. Light volume will usually indicate a lack of institutional participation, or conviction by the big boys.
BTDStocks.com Thursday, May 12, 2011 End-of-Day Update
With the major indexes opening today's session down and things looking grim stocks staged a recovery and were able to reverse decent losses and finish higher with mild gains. Market breadth was generally positive but investor participation did not indicate the positive reversal had strong backing behind it.
BTDStocks.com Wednesday, May 11, 2011 End-of-Day Update
The bears had control of the stock market today as each of the major indexes declined at least 0.9%. Today's action was reminiscent of the type of trading we saw last week with investor selling pressure strong in down sessions. In contrast, during recent up day's buying from investors has been weak. Market breadth was weak today.