Less Than Meets The Eye

Today's action was pretty bullish, especially in a contrarian sense. The market was under pressure at the open on the news of the thwarted terrorist attachs and the raised terror alert. But it bottomed early and closed nicely higher on the day.

Small-caps and tech led the way. Retailers were the strongest (+2.2%), followed by semis (SMH +1.5%). Oil and commodity-related issues fared the worst, as oil plunged $2 to $74.

But below the surface, volume ran at lower levels than yesterday. So we got no accumulation, and continued the pattern of higher volume on the down days and lower volume on the rallies. Moreover, the Hi/Lo indexes deteriorated on both exchanges.

This leads me to believe that this is more of the markets simply chopping around. I sense that the pattern from the last few years is set to play out again, with the market making a bottom sometime in September/October before launching on a nice rally into year-end.
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