Tuesday Outlook: The Light Volume Rally Has Legs

THE LIGHT VOLUME RALLY HAS LEGS

The low volume rally continues with news being spun six ways from Sunday. Today it was carryover optimism from last week’s winners Google (GOOG) and JPM (JPM) and today’s rationale seemed a stretch: “Gannett revenues down; results top expectations”, “Eaton Corp sees improvement in key markets” and “Hasbro rose on cost cuts”. Oh yeah baby!

In the meantime, we await Apple (AAPL) and Texas Instrument (TXN) earnings. Further investors are oddly joyful in high oil and commodity prices as they look at recovery prospects more than increased costs. Fed Chairman Bernanke seemed to give a green light to further dollar declines when he suggested China should spend more and Americans spend less. Did I get that right?

As stated, volume was on the light side and breadth was as positive as you’d expect.












































Below are some After Hours quotes.










































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Comments

[maelstrom:]

Fry, your comments on the charts are a treat..LMAO

Oct 20 08:12 AM

[bricki:]

As usual very informative.

I wonder if a contrarian view of the light volume is useful. Normally that is viewed as a sign that the market move is not real or sustainable, but in this case it might be a sign that sentiment to the upside is not overwhelming or overdone.

We keep hearing about bond purchases, money on the sidelines, etc. and that retail investors are not in yet. This is bearish sentiment that leads to light volume. That bearish sentiment also represents potential 'greater fool' buyers who might capitulate to the upside if this rally continues.

Of course these same people may be right if we have a significant from here.

Oct 20 09:59 AM