Light Volume And The Falling Dollar Save The Day
Is this May 10, 2011 or August 10th, 2011? Where has all of the volume gone? This is one of the lightest trading volume sessions of 2011. As we should all know by now, when the trading volume is very light that will generally favor the upside in the stock market. This afternoon the SPDR S&P 500 Trust(NYSE:SPY) is trading just 69.3 million shares as of 2:45 pm EST. What a joke! Just three trading days ago the SPY traded over 222 million shares. How can the volume change so dramatically. The Citigroup Inc.(NYSE:C) 10 for 1 reverse split can't be the total blame for the light trading volume.
The U.S. Dollar Index(DXY) is now trading lower by 0.10 cents to to $74.63. The DXY did trade as high as $74.86 this morning before declining lower on the trading session. Again, as we all know by now when the DXY declines the major stock and commodity indexes will trade higher.
So there you have it. Light volume that is reminiscent of the summer doldrums and a falling U.S. Dollar Index lead to a higher stock and commodity market. Even crude is trading higher today and that move higher comes after margin hikes. Every trade is essentially a trade on the DXY at this time.