The Low Volume Reset

• Posted by Robert Sinn
• on November 28th, 2011

Today’s market “reset” on news that the eurozone will probably still be around in 10 days left many market participants clueless as to which trade to make next. Do you buy the S&P ($ES_F, $SPY) up 30 points at the open? Or do you short on the first day of an oversold rally? It seems that most market participants didn’t have a good answer to these questions which left us with a lackluster range bound trading session. Michael McDonough of Bloomberg tweeted an interesting chart showing today’s low volume global rally:

 

I believe that the lower volume is just one manifestation of a pervasive apathy which has infected market participants in recent weeks. Many have been burned by the vicious whipsaws of the last several months and have given up playing these markets on any timeframe longer than minutes or hours. The enormous macro uncertainty combined with the day to day market whipsaws have moved many investors/traders to the sidelines permanently. What will it take to bring them back into the game?

The following quote from Citi ($C) this morning pretty much sums it all up, regarding US equities: “attractive entry point, barring exogenous shocks”. A quote which offers zero value but sums up the current uncertainty facing markets – Of course, equities wouldn’t be as attractively valued with such high risk premiums built into valuations if the threat of exogenous shocks weren’t so great.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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