Wednesday, December 29, 2010

How High is Up? Stocks Continue Relentless Rise

It's absolutely amazing to anyone who's followed the markets for the past twenty years or more, how this current rally, based entirely on free money flowing from the Federal Reserve to the Primary Dealers, continues to defy the gravitational pull of low volume.

Just like the first two days of the week, Wednesday was full of nothing but hot air and the pretentious attitude that the US and the rest of the planet are in some kind of economic recovery and not being lifted by fumes, happy talk and a lack of market participants. This week should stand the test of time as the lowest volume week of at least the past 10 years.

Those few remaining players - the Primary Dealers, select hedge funds and some high-wealth individuals - managed to wring out even more gains as the Fed delivered the final POMO of the year, a mere $5.4 billion, though an amount adequate enough to lift this listless market significantly.

Dow 11,585.38, +9.84 (0.09%)
NASDAQ 2,666.93, +4.05 (0.15%)
S&P 500 1,259.78, +1.27 (0.10%)
NYSE Composite 7,961.48, +29.81 (0.38%)

Advancing issues swamped decliners, 3991-2544. NASDAQ new highs were at 120, with 15 stocks hitting new lows. On the NYSE, there were 189 new highs and just 16 new lows.

NASDAQ Volume 1,079,771,000
NYSE Volume 2,318,948,250

Commodities continued their path higher as well, as gold added another $4.70, to $1410.90 at this time, and silver gained 29 cents, eclipsing its previous 30-year high (Dec. 7, $30.50), now trading for $30.58 per ounce.

Crude oil for February delivery, the front-end contract on the NYMEX, took a 37-cent haircut, but is still dangerously high, at $91.12 per barrel.

We'll get unemployment claims before the opening bell on Thursday and no other data on Friday, the final trading day (and final day, period) of 2010, putting to rest a very painfully-slow post-holiday series of sessions.

One final note for the day. There's a duopoly that is just begging to be resolved. Short interest is at record lows while margin debt is at its highest level since the collapse of Lehman Bros. in 2008. Those two data sets cannot exist side-by-side for long without something breaking out somewhere.

No comments: