Wednesday, August 31, 2011

Another Low Volume Rally

I had my whole post typed up this morning, and then somehow Blogger lost it and it was gone. I was too busy to retype the whole thing, so I'm just posting some comments at the close.

Today's rally was constructive, even as rallies continue to come on lighter volume for the most part. Additionally, the rally has been led by defensive type names, not the traditional high quality growth names you normally look to for leadership.

There were some solid economic reports today with a good ADP Employment report and a better than expected Chicago PMI report. The big test comes on Friday with the monthly govt. payrolls report. I tend to think they will be disappointing, but we shall see.

Gold prices were higher this morning, but finished lower at $1827; Oil prices finished flat near $88.91.

The 10-year yield got a little bounce, rising to 2.21%; and the VIX closed down -4% to 31.60. But the fact that it is remaining stubbornly above the 30 level makes me think that we haven't seen the last of the volatility days in the market. Next week, after the Labor Day holiday volume levels should pick up again.

Trading comment: No changes to my near-term strategy. I don't want to be lulled into a sense of complacency with these low volume rallies. SPX 1250 still looms as big resistance. So I am remaining cautious, and continuing to trim cyclical names and lagging positions.


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