Markets Weak As Eyes Look For Next Catalyst
Today's trading session is simply a repeat of the trading action that we all saw this past Friday. On January 7, 2011 the major stock indexes such as the SPDR S&P 500 Index Trust(NYSE:SPY), and the SPDR Dow Jones Industrial Average(NYSE:DIA) all sold off during the first half of the trading day only to rally back on extremely light volume throughout the rest of the session.
This morning the Dow Jones Industrial Average was trading lower by nearly 100.00 points in the first twenty minutes after the opening bell. However, since that time the volume has faded and the major stock indexes floated higher as if they were a helium balloon. This type of action occurs nearly everyday. The Federal Reserve Bank completed another $7.9 billion in U.S. Treasury purchases today by 11:00 am EST and many traders and investors will simply front run the Federal Reserve Bank's POMO operation. That can be the only explanation for the repeating action that we see day after day in the major stock indexes.
The U.S. Dollar Index is also pulling back today which can and often helps the major stock averages inflate and trade higher. However, lately the light volume trading has been the catalyst for the move higher in these markets especially when the major stock market indexes start the session lower. Unlike a Friday where we usually look for a flat close, today is simply anyones guess. All I know is when the markets are this light it certainly makes for a dull market. We should all know by now the old market adage that states, 'never short a dull market'. Despite the light volume rise throughout the trading day this is one dull day.