More Investors Stay Low...

What do you get when you combine the lightest trading volume of the year (based on the NYSE) with a little bit of pessimism? Yes, a huge drop. That was exactly what happened in the stock market today. The little bit of pessimism was contributed merely by the continued "data weakness" in the existing home sales market. Why does a light trading volume make big falls? Because sellers have to keep lowering prices in order to attract the very few buyers if they really must sell. Simple logic. Perhaps investors decided to stay low before the Consumer Confidence numbers tomorrow (see economic calendar)? Maybe. But whatever it is, all these culminates into a single word "Uncertainty". This uncertainty was also reflected in the sudden sharp fall in bond yields as traders rush for safe haven once again. The Dow echoed this uncertainty as it transforms its short term bull trend into a short term neutral trend. Such neutral trends have equal potential to break out upsides and downsides. However, occuring within the framework of a primary bear trend makes it a lot more inclined to downwards.

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