The market stages a very nice day of consolidation as volume dropped well below Friday's level. For most of the day's session stocks traded in negative territory as last week's gains were being digested by the market. Nearing the close it appeared stocks were set to close near the lows on the day, but buyers stepped up and pushed stocks well off the lows at the close. Buyers are lurking and the end of the day action certainly highlighted the case. A great day for an uptrend as days like these help work off overbought conditions the market may be in. We continue to operate in an uptrend and continue to look for this market to push higher.
It is clear stocks love further monetary easing by the Federal Reserve. The unintended and intended consequences are pretty significant, but the unintended consequences will only hurt those who cannot keep up with inflation. Just to think in four years after gas prices plunged to well below $2 a gallon they have risen back to near $4 again. In many places, gas is well above the $4 mark and this hurts those whose income levels do not keep up with this type of inflation. I just do not see how buying more mortgage securities is going to help the poor rise up or create more jobs. As for our trading it appears it will be a positive, but then again we just follow price.
A big positive was the fact that volume was running well below Friday's level throughout the session. Running mostly 30% behind Friday's level and remained that way at the close. NYSE volume ran 34% below Friday's level and the NASDAQ 26%. Expect volume to move higher tomorrow and we'll see if buyers step up and avoid distribution. We have not seen too many bad distribution days and at this point we only have two distribution days on the books. The key is to pay attention to see if we have a clump of distribution days together and leading stocks falling hard. Your stocks will tell the tale of the market if you are in the right ones.
A good start to the week and now we'll need to build upon it. Remember, it is very important you need to have a game plan and execute!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.