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Low Volume Rally Fades into the Close as Institutions Rush to Sell Stock

|Includes: DIA, EDC, EDZ, QQQ, SPY, SQQQ, TECL, TECS, TNA, Direxion Daily Small Cap Bear 3x Shares ETF (TZA)

The European Bailout plan hope carried through to the open as European Stocks jumped at the thought of a bailout. Housing prices dropped again, but again less than expected helping out stocks move higher. Consumer confidence dropped once again, but like Case-Shiller home price index it wasn’t as bad as expected. It is incredibly disappointing we consider numbers positive if they aren’t as bad as expected. Intra-day it appeared the market as going to break away from the recent consolidation, but institutions had other plans. The final hour of trading institutions sold stock and in a big way as volume jumped in the final hour of trading. We continue to see very shaky action from this market and it continues to highlight cash is king.

We continue to hammer on the point we have a severe void in market leadership. Our market leadership group only was able to sneak out a .53% gain. It is ultra-important for a market to have solid leadership breaking out in sound bases for a market has any chance of pushing higher. Last September, we had solid leadership and a market cooperating with a tighter price action. Until we see the landscape of leadership change and the market tighten up we’ll be stuck in this trading range.

Volume was a big red flag today. The day started out with big volume, but it didn’t last very long at all. It was clear by mid-morning institutional buyers were not participating in the market. Despite the rise into the 2 o’clock hour, volume was not following price. What was most revealing was the final hour with volume racing higher as stocks fell from the highs of the session. Institutions are net sellers and continue to dump stock on this market. It is quite interesting we are seeing these low volume moves off the lows only to see the downside rear its ugly head with BIG volume. If we were seeing positive action in the market we would see volume soar on buying. Sadly, it appears prices are going to head lower before we get any sustainable to the upside.

Cash remains king and we continue to see a plethora of shorts in the market. The long side of the market appears baron for the time being. Cash is king!