Trader on why there's not a lot of stock to buy: "They're not in shape to sell stock."
Fascinating trading day, with lots of moving parts.
It likely had much to do with Greek debt talks, though Bernanke may have given it a little push. Bernanke did not back off convincingly from more accomodation.
2) Gold rallied, possibly on Bernanke as well, but oil did as well, as there were vague rumors of increasing Iranian involvement in Syria.
3) Europe also rallied modestly going into the close; the German DAXX ended down but off the lows as German Industrial Production was down much more than expected.
4) The dollar is down, and U.S. bonds are down.
"They're not in shape to sell stock."
Another day of high drama in Greece, with an uncertain outlook. Global banks like Macquarie and UBS are warning that business prospects are poor for 2012. U.S. earnings have been, at best, fair, not great, with clear evidence that earnings growth is decelerating.
And yet, the major U.S. indices are again near multiyear highs. Lots of warning signs, lots of signs of complacency, but the markets yawn. Low volume. Low volatility. Narrow trading range.
A veteran trader I've known many years called this morning and said he had dinner with another veteran trader last night, and asked him why there was such low volume and so little stock for sale.
"They're not in shape to sell stock," the trader responded.
The rally in January caught many by surprise, the trader said. By the end of the month, many were well behind, though the high degree of skepticism prevented many from getting back in. Volume was — and is — anemic, suggesting demand is not particularly intense.
And that's the problem: many continue to underperform. "They're not selling stock because they don't have it to sell. They're worried they need to buy, not sell."
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