With nearly half the trading complete, the market is pulling back on heavy volume. This follows the ECB's announcement that they will work with the Euro nations to support their bond markets. That said, the bottom line is that the ECB failed to announce any "substantial" support (i.e. no quantitative easing).
In my opinion, the chances that the ECB would enact a large QE program was the last leg of the stool holding up the market- as lackluster second quarter earnings, uncertainty towards the world economic outlook, and no action out of Fed leaves nothing but air under the latest market advance.
As I write, volume on the SPY is on track to post somewhere in the range of 230 million to 250 million shares. The last time you saw that kind of volume was on May 17 and 18 of this year, noting that this volume level also corresponds with my short-term price outlook of around $129.
You can also see the confidence- or lack there of- in intra-day trading.
You will see that the market retraced the opening down draft, fully closing the gap. Once completed, heavy volume came in towards the downside, pushing the SPY down more than 1 percentage point versus yesterday's close. I would suspect this is institutional money coming out the market. Without some clarity to Europe's woes, action by the Fed (which by the way I think will not occur until money supply and/or the market contracts in conjunction with a decline in employment levels), or an improved earnings outlook, it is likely that institutions will continue to lighten their equity holdings.
Lastly and just as a note, the yields on the ten and five year treasuries are falling. In conjunction the dollar (as shown in the performance of the UUP), is rising. The risk-off trade is back.
In my opinion, the chances that the ECB would enact a large QE program was the last leg of the stool holding up the market- as lackluster second quarter earnings, uncertainty towards the world economic outlook, and no action out of Fed leaves nothing but air under the latest market advance.
As I write, volume on the SPY is on track to post somewhere in the range of 230 million to 250 million shares. The last time you saw that kind of volume was on May 17 and 18 of this year, noting that this volume level also corresponds with my short-term price outlook of around $129.
You can also see the confidence- or lack there of- in intra-day trading.
Lastly and just as a note, the yields on the ten and five year treasuries are falling. In conjunction the dollar (as shown in the performance of the UUP), is rising. The risk-off trade is back.
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