RetailInvestor.US's  Instablog

Tuesday marked the highest volume trading day on the S&P since May of this year, but the resulting close didn't seem to tell us much (or did it?). Despite the high volume the index closed down only slightly. In fact, we're up for the week (~0.7%), and we closed above the key 1228 level yesterday. So, what gives? Where does the market go from here? 

It feels to me like the winds have shifted slightly. Media commentary has moderated some with show's like Mad Money and Fast Money advising traders to take profits where they can, given the +4% up-tick on the S&P already this month. I think this commentary is a bit of a tell for you and for me. 
Market Pundits everywhere have been touting that institutional investors will be shoring up balance sheets, selling losers and buying winners, through December 17th. But I think this hypothesis is over emphasized. 

The large volume over the past couple of weeks indicates to me that this may have already occurred and that it was on a much smaller scale than in years past. And logically it should have been. Think about it, there weren't that many stocks that traded down on the year. The one are where things seem a little too good to be true is in the commodities space and I think you'll continue to see volatility there through the end of the year. 

As for me, I've taken off my VXX insurance, and I've added to my INTC and VZ positions. I feel that these two names have the catalysts needed to power them into early next year, with nice dividend yields and relative underperformance within their sectors. Additionally, their charts appear to be in the early stages of establishing bullish trends and I'd like to be along for the ride.

Personally, I'm considering taking profits in KO and COP. KO scares me a little given the market's reaction to MCD's quarter and the weakness in China. It looks as if they've both outperformed their peers all year and the juicy dividends are starting to diminish with their increased valuations. There are plenty of other, well-run companies that can provide a bit more upside with healthier dividends within the same space.

Currently I'm 70/ 30, equities/ cash, with a 10% position in the UUP.

Disclosure: Long APOL, C, COP, EXC, INTC, KO, MRK, PG, VZ, UUP



Disclosure: I am long APOL, C, COP, EXC, INTC, KO, MRK, PG, VZ, UUP.