The market is dead. Continuing with last week’s theme – there was no volume, no volatility, and no “action” of any kind. If the market isn’t dead, it sure is in a very deep slumber. The range has been so tight for so long that when it does wake up, or come back to life, it should do so with a bang.
Speaking of today’s lack of action, Reuters said the following… NEW YORK (Reuters) - Stocks ended slightly higher on Monday in a light-volume session as investors stayed cautious ahead of corporate earnings and key auctions for European debt this week.
After breaking out of the gate with strong gains on the first day of trading in January, stocks have been confined to a tight range in daily moves and volume has been low. The S&P 500 faces strong technical resistance as it has been unable to pierce through 1,285, the closing high set in late October.
Months of summits and meetings have still not convinced investors that Europe will avoid messy defaults or a break-up of the euro zone.
"That is what the market wants to get a look at - what is it that these multinationals are seeing in the global environment that gives them pause, or is the tone going to be a little better than expected," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
Debt sales by Spain and Italy later in the week should provide insight about investors' confidence in plans to solve the euro zone financial crisis.
"There is this sense that we really need to see something that is going to convince us that this EU challenge ... is a headwind that can be managed," Kenny said.
After meeting in Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy warned Greece it will get no more bailout funds until it agrees with creditor banks on a bond swap and a deal to avert a potential default.
Perhaps the market will find whatever it is looking for that will provide a spark to the market on Tuesday?
Trade well and follow the trend, not the so-called “experts.”
Larry Levin
Founder & President- Trading Advantage
