What a boring day; of course it was a late-spring Friday. We didn't even manage to move very much in the final minutes of trading like we have done so often recently. Everybody was already in the Hamptons, I guess. However, while it was a very slow day, the flat action is a very good way for the market to consolidate the week's gains. We have done an excellent job of holding on to the breakout over 1108 of the S&P 500, and the flat action of the last three days serves as a good foundation for some upside as the second quarter winds down.
If you want to find some flaws in this action, the low volume, narrow leadership and lack of energy are good candidates. This may be the "new normal" regarding volume, however. The so-called retail investor is absolutely nowhere to be seen anymore. This market is acting as though big buyers are tripping over each other to load up, but for some reason almost all of rallies since June 2009 have lacked big momentum. However, they keep on going and have consistently ground the bears into short-squeeze fodder.
My biggest concern about the market is that the news flow has generally been poor. The economic reports from May have been uniformly weak, and other issues like the oil spill and European debt are far from any resolution. Probably. Gold hasn't been leading this market because of the cheery economic situation, and the risk of negative developments strikes me as fairly high.
Nonetheless, we have a decent base for some upside, potential for some end-of-the-quarter mark-ups and then earnings season, so the bulls will have some opportunities....
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