SUMMARY:
- Low volume once more as market drifts higher. Needs more trade to make the breakout.
- Wholesale inventories post modest gain, indicating not as much softness as feared.
- Dollar firms as China leaves yuan alone, Oil jumps, gasoline futures fall.
- Fed funds futures changing their tune even as money supply continues to crumble.
- Indices trying to form handles to the short double bottoms and continue the near term bounce.
Soft open, solid finish, but no real strength.
It seemed a long shot that volume could be lower than Friday trade but it was. Stocks started softer and on light volume. After testing and holding above near support they started a slow, steady climb through mid-morning and through lunch. An afternoon attempt to sell had no strength, and in the last hour it fizzled. That allowed a drift higher to the close as a modest bump in late volume pushed them higher.
There was no breakout, just another move between near support and near resistance. All the indices could do with the volume was trade within the range. The fact that they rose into the close shows some modest bullishness lingering after the Wednesday follow through session, but it would be hard to call this a positive; it was just a drift higher. Indeed, another lateral move on this low volume would have been preferable to a low volume rise. That would have acted as another shakeout and kept the pessimism a bit higher as it was late last week when most were moaning of a lack of follow through after the Wednesday upside session that was actually follow through to the prior week's reversal.
The move leaves the indices at next resistance, looking for some continuing leadership to take them higher. Many leaders held up very well Monday, e.g., DJO, EW, FLS, GENZ, HANS, HUM, RVI, SIVB, UTHR, WYE, and that continues to bode well for the market overall. The up and down volume fight two weeks back yielded a rebound on volume and then a follow through mid-week. Leaders started to breakout, a key step in a rebound attempt's life. So far the price/volume action has been as it should be since the back and forth action was resolved. What we need to see now is another solid upside break through this near resistance to continue the move. Over the weekend we indicated it may take a couple more sessions to set up. Despite the low volume bump higher Monday it is still doing that. Not the best action but with the leaders still performing and no return of distribution, it is very workable for a continued interim rebound. |
