Volume continues to back down from Tuesday's level and stocks continue to hang in a holding pattern digesting the recent gains. We did get a bit more economic news showing Jobless Claims were less than expected and wholesale inventories fell. It will be nice when claims figures show job creation rather than continued job losses. Most economic news is for cocktail parties and not for trading or at least not for our style. After the Europe close EURUSD took a dive sending our markets to the lows of the session. Buyers were able to step up and support the market pushing prices back to near the highs of the session. Volume dropped more than 10% across the board, a clear sign institutions backed away from the market. We continue to see this market move sideways consolidating its most recent move.
There just something not right about this market despite our continued rally. We are not about to argue with the market and fight it. Something just doesn't feel right out there, but this is precisely the reason we have a cut loss strategy. Just because we may feel one way or another we could be dead wrong! We will not compromise our strategy because our feelings. Opinions are very dangerous and most often they keep you from squeezing every last bit from the market. We'll stay with cash and a few long positions. Price will dictate our next move in either direction.
Sentiment continues to be dominated by those who are neutral. The number of bears did slip to 27.35% according to the AAII sentiment survey. However, only 36.47% of respondents were bullish! How can this be? There are lots of reasons, but when the market appears to want to crack wide open rumors of Fed or ECB action always brings in short covering. It is what it is and fighting the tape is a futile effort. There are lots of reasons to be bearish and very few to be bullish, but when you boil it down all that matters is where price is moving.
Tomorrow morning we'll get a reading from Import prices and the release of the monthly budget statement. Like others, we are looking forward to the weekend. Make sure you get out there and enjoy the weekend.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.