Lowering the Volume

The beginning of our trading week was knocking on the door of 2013 highs in the S&P futures. The number of S&P contracts traded Monday represents less than 50% of normal average volume. We were into 15 days without a 30 point correction and I expected a sharp 1 to 2 day correction in the magnitude of 30 to 50 S&P points. The adage used by traders are that the current prices are floating on air with no foundation underneath. The bonds were trying to stabilize as each bear raid was met with buying on Tuesday. We were able to mount a plus day which is showing that the stabilization and foundation is being laid or perhaps a bigger move to the upside to offset the short term oversold. The greatest focus of quite some time was on Bernanke's testimony on Wednesday and Thursday.

Wednesday morning I expected anticipation being greater than reality. The fear factor was great, but the reality was a very benign stock market. We did not see high plus tick nor high minus tick as Bernanke became even a better politician with many words, saying little. Up to this point, we still had not seen the manipulators shut off their computers for even a day yet. The bonds have actually become a trading vehicle. This is something that they have not been for really the last two years. It appears that the market is not being manipulated as much as previously and that makes the bonds have more ebb and flow. An ebb and flow market is a trader's delight. Welcome back bonds.

The second day of testimony before congress provided Bernanke with an opportunity to push the market to all time highs making any congressmen who wish to challenge his actions more difficult. It is probably more noteworthy that this rally today was done with no high plus tick. We are now into the fourth week without a meaningful correction in the S&P futures. The movement since June 24th has encompassed 135 points on the S&P futures. The push has defied gravity. It is also a push that has had no substantive buying. The internals for the past two weeks have been very anemic. This will eventually open up some very heavy minus tick as this market starts its decline.

The volume particularly from midday on was incredibly low Friday. It is amazing to me to see how expiration Fridays over the course of the last two decades have become less and less volatile. The expiration effect must be done earlier in the week which means by Friday the transactions are less numerous and are smaller size. The bonds had a buyer that pushed the bonds with a consistent methodical uptick until the early afternoon but then maintenance occurred holding the gains. This particular move had not provided any acceleration nor volume increases so therefore once again it is suspect.