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The Only Good News: Light Volume on Down Days

Huh, what happened to our rally last week? Same thing that happened to the rallies in November, January, and March... it's dribbling away.

It's not the point moves that're troublesome, it's the news flow and the direction of trading. The only good news is the very light volume on the down days.

Want the rationale I am hearing from the trading community -- or are you just fed up by now and don't want any more excuses? I understand.

Here it is anyway:

1) We are back to a defensive trade, with commodities up, everything else down. The record oil prices are killing transports and retailers;

2) economic numbers are not improving, indeed they are going in the wrong direction. Greenspan and the IMF have become bears; the "recovery in the second half" crowd are under pressure, and there are early whispers that economists will be soon taking down 2009 estimates;

3) government efforts to help housing seem to be stalling; stimulus checks a one-time blip, not enough to overcome negative trend;

4) financials: fear of expansion of credit crisis outside of subprime and Alt-A still very real; credit cards and commercial real estate an especially soft spot right now;

5) earnings: every time we get near 1400 on the S&P 500, we sell off. At 1400 the S&P trades at about 15 times forward earnings; traders gripe that this is a rich multiple when earnings are melting under you.

So what's the trade? Keep cash high, keep real commodity exposure, and don't expect too much short-term from equities. Not that much downside, not much upside. Wait for more information.

Gee, thanks for that. Sounds like January again. And don't expect to hear any baseball analogies from me -- traders are fed up with guessing what inning we are in. Some days, it feels like we're in the eleventh.

Courage. Better days are coming.

Bed Bath and Beyond's Glum Outlook

Bed Bath and Beyond down about 6 percent after hours as they gave guidance for the current quarter (their fiscal first quarter) below expectations.

Here is the fear: that despite the fact that earnings estimates have been coming down week after week for the first and second quarters, analyst estimates are still too high. This puts a very clear ceiling on retail stocks; they will likely come down in anticipation there will be many more announcements like this from retailers soon.


Questions? Comments? tradertalk@cnbc.com

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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