volume or no volume...good day..
Tuesday, December 28, 2010 at 08:00AM The initial reaction to China hike resulted in a ~17 pts ES drop overnight, but as discussed here yesterday the market should behave better than Oct.19. The ES slowly recovered and once one of the lowest volume days on record finished, a flat day was the result of an underlying bid. Volume, or no volume as was the case today, the action was constructive, if not pretty impressive considering the Shang was under pressure ~2%. The commodities space was the early tale sign for the US markets as unlike crude off ~4% last time, everything (including crude) in the space held up well from the opening bell.
Unfortunately for trading purposes, the ‘winners’ momo still are not being bought, but instead the laggards hold the market up eg. Financials. The same trend remains from December 2/3 .. “..it is probably ‘growth’ stocks taking a backseat as they may seem ‘expensive’ compared to the all the other stuff out there.. If there is ‘performance anxiety’ out there into year end, managers may feel there is more upside to the cyclical laggards”. Also, any action in individual stocks is dictated by ‘media’, eg.Baroon’s with CSCO, NFLX today as traders have little to jump on. Some holiday trading continues in MCP, (daily on top of Shadowlist gainers seemingly), with REE/newly listed AVL from TSX joining in. The run in MCP has alot to do with the lock up period ending soon in January, which will result in selling off most likely. BSFT, marginally put in a NCH.
In all, US markets handled the hike event in stride (may not be the case come January as this inflation noise will pick up steam from here). Maybe this was the only day this week for the hike to ‘offset’ the expectation of further window dressing.