Today's Trading Tone Is Different
The last five sessions, traders have taken down the markets in mid-morning; this has not happened (yet) this morning.
Traders attribute these mid-morning selloffs to day traders who are shorting the market due to what they believe are overbought conditions.
The problem is that most day traders have to go home flat, by definition. Therefore, as we get closer to the final hour of trading, day traders who are short need to cover their positions. This can create a natural upward bias, which has been evident in the last several days: Lowry notes that the Dow has risen 25, 17, 24, and 51 points in the last hour in the last five days.
Still, don't get too caught up in blaming the steadiness of the market on day traders; when you have a day like today, there are clearly real buyers around. My emails this morning are full of trader comments like "I was waiting for pullback and now having to play catch-up."
The S&P is poised to pass 1,000 for the first time since November 5th.
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