Transcendental Market Truths:
The Market:
Other than the stock market, the currencies reacted nicely to the news about the Greek bailout by taxpayers on Monday. The Euro cratered and the Yen followed along dutifully, pushing the Dollar Index up (those are the two most-weighted currencies in the Dollar Index).
The stock market is doing its usual manic act as it nears the intermediate term high due at mid-month. The NYSE Composite has a good track it's following to get there. It's the reason the market has been so resilient, in fact. The herky-jerky moves since the April high are apparently building a short term trading range from which a launch to the May 20 high is to take place. Like a dancer who must dip to gain energy to leap, the market is dipping to gain power to put in its final exhaustion rally at mid-month.
There were more than 3 times as many stocks up than down on Monday. Volume continued its bearish trend lower, so the market is moving up on very few shares being traded. Volume, in fact, was concentrated in the most liquid of stocks. It's not hard to understand why this is happening, though. Money managers know that a downturn is coming (most think it will be a 10% correction), so they're only nibbling at the most liquid stocks in the hope that they can sell quickly and avoid even a 10% correction.
The other reason volume is low is because mutual funds are running out of cash. They are sitting at almost record lows in cash, so in order to buy anything they would likely have to sell something and run into a tax liability for shareholders. So, they're nibbling, but they just don't have the cash to really accumulate any shares at these rarefied levels. This is a market that's dying on bullish sentiment and the lack of fuel to push it higher - nothing new here!
Dollar Index:
The Dollar Index continued its bull run as the Euro self-destructs. This is a long term bull market move in DXY, so I'm enjoying the ride and buying the dips! |
