We had disappointment over industrial production numbers this morning, coupled with earnings warnings from home builders and and two steel stocks: AK Steel and Steel Dynamics ...yet stock indices are up today.
For the last two days, traders have tried to sell the market off at the open, and have run out of steam in the first half hour.
In other words, there are not sufficient sellers to keep the market down.
Why not? First and foremost is the trade that has been moving markets all September: hope and underexposure. Traders have not outperformed and made little money this year; they need alpha now, and stocks is the best way to get it.
Why? Many traders thinks stocks look attractive relative to other asset classes — gold and bonds are not cheap by any historic standard.
Stocks may be making a bit of a comeback (the S&P 500 is up 7 percent so far this month), but volume is NOT coming back. NYSE volume for September so far is 31 percent below the same period last year.
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