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Traders Push Stocks Higher in Higher Volume

|Includes: DIA, IWM, Invesco QQQ ETF (QQQ), SPY

The market responds positively to the Federal Reserve’s meeting minutes

The story of the day was the Federal Reserve meeting minutes and the action in the early going highlighted the importance of the minutes.  Stocks fell in early trading after a lower than expected NFIB Small Business Optimism reading of 89.0.  Buyers found their way back into the market aided by a better than expected IBD/TIPP Economic Optimism survey reading.  While confidence is not great, it is better than what was expected.  After the initial surge of buying the market remained flat from 11am through 2pm at the release of the meeting minutes.  By the end of the trading session stocks gained on volume flashing yet another day of accumulation.


It is all about the Federal Reserve and their asset purchases.  The central bank merely issued the statement of adding another round of previously announced asset buying the market rallied on the news.  We are concerned with the reaction and how stocks are reacting and it was positive.  The jump in volume, from preliminary estimates looks below average volume was still higher than the previous day showing institutions were willing to step up and accumulate shares of stock.

History shows us money creation leads to inflated prices and inflation bodes well for price-to-earnings ratios.  In addition, earnings yields are higher than bond yields giving investors another reason to accumulate stock.  Ultimately, price and volume action will dictate where the market will go and at the moment this uptrend has positive momentum.

Earnings season is upon us and INTC stock released its earnings report beating its earnings estimates by two cents a share.  The stock jumped nearly 2% in initial trading and provided guidance the market has accepted as positive news.  There are plenty of ways to trade around earnings and typically many like to lighten the load ahead of earnings reports.  It is a wise decision to pair back a position as it rises to lock in gains.  On the flip side, if a stock is going against you should have a cut loss strategy in place to protect your downside.

This market remains in an uptrend it is absolutely futile to fight against a strong trend.  Regardless of your opinion or opinions on CNBC the price and volume action of leading stocks and the market will dictate directionally where we’ll head.

Disclosure: No Positions