Low Volume Continues

Monday morning the stock market opened weak and traded in a very narrow range for the better part of the day.  There was one drop late in the morning and then a rebound out of that low with a slower replay of the same thing over the next several hours.  All in all it was a Dull day with Very light volume, the lightest of the year except for the mini-trading day between the weekend and the Fourth of July.  This volume drought is a bearish indicator.  

The rally we saw last week was on pretty low volume and today’s volume on the downside was even lighter.  The bulls might look at Monday’s volume and take some comfort in the down day with low volume.  We would say that it is a harbinger of the coming disinterest in the market.  The market now wants to figure out if it’s finally time to go down.  These volume figures are confirming that need.

There was some international news that was said to put a damper on the opening…we don’t think that had much to do with the selloff on Monday.  The news out of Iran could be a market mover if things get out of hand but we don’t think it had much to do with Monday.  

One thing that might have had some influence was the report from Lowe’s, the second largest home improvement retailer (can you name the largest?).  Lowe’s had an 11% increase in net earnings for the second quarter but missed expectations by a penny.  Then it lowered its outlook for the full year results.  The stock only lost 4% but its news fits in with our general view of the housing situation—slowing down.  (HD was only down a little over a percent.)

For further confirmation of this, we wait intently for the home sales reports due later in the week.  On Wednesday we get the existing home sales and on Thursday we see the new home sales.  

The reports out of the media on Monday were pretty much as expected, saying that the market was due for a pull back after last week’s advance.  You know our view, that being that last week’s rally was Very weak and should be entirely retraced in a very short period of time.

[Editor’s note:  The posting schedule is going to be revised for this week only.  There is a good chance that the Update will not have a new posting for Thursday.  The regular schedule will be followed starting Sunday evening the 27th.]

Dow Industrials:  11,345.05  -36.42
QQQQ:  38.42
RYVNX:   21.95
RYAIX:  24.26
RYCWX:  41.67
TLT:  87.08
BEGBX:  13.75