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Why Hardly Anyone Is Selling Shares

Trading volumes may be light, but there have been very little blocks of stock for sale in the past two weeks.

Some say it is due to tax purposes (some swing guys sitting on some profits, as opposed to previous years where there might be more tax loss selling), others just note that large vanilla funds need to hold on and do the usual window dressing going into the close, others note that fundamentals have simply changed: the economy doing better, sovereign wealth fears have abated (for now — bond auctions begin anew next year), QE (quantitative easing) continues, and the majority of mutuals have beat their benchmarks this year.

There may be another issue at work: December has been a good month for new highs. "Liquidity is always thinner when a stock is making new highs, because there is no levels established for shorts to lean on," one trader noted to me.

Elsewhere:

1) Spain successfully sold 3 and 6 month bills, but at much higher yields than a month ago: 1.804 percent for the 3-month vs. 1.743 percent, and 2.597 vs. 2.111 for the 6-month.

2) U.S. banks were trading up fractionally in the pre-open. Again. (See where banks are trading now.) After being pariahs all year, December has turned into one of the best months for banks in a long time: all the big names are up double-digits. They have been advancing despite headlines: WikiLeaks says they have documents harmful to at least one big bank, NJ threatening to block six big banks from foreclosing, rumors of new investigations everywhere. The reason they and other unloved groups keep advancing: traders are betting that as the broad market improves...there will be rotation into the unloved groups.

3) Car-Max rises 3 percent after beating estimates ($0.36 vs. $0.34 consensus). The used car retailer reported a 16 percent rise in same-store used car sales as customer traffic continued to rebound and as average prices rose 2.1 percent. CEO Tom Folliard noted that sales conversion also improved, partly because of "improvements in consumer credit availability."

4) Darden Restaurants falls 3 percent as the restaurant company's Q2 earnings were inline with estimates. While comps were up 2 percent at Olive Garden and up nearly 7 percent at LongHorn Steakhouse, they were down a disappointing 1.6 percent at Red Lobster. The company's earlier earnings growth forecast was reaffirmed, but the company warned that sales would be up just 2 percent this year - at the low end of its previous forecast.

5) ConAgra Foods reported Q2 earnings inline with Wall Street estimates. However, that match follows the foodmaker's warning a couple weeks ago. Although sales rose slightly more than analysts' expectations, the quarter was challenging for the company. ConAgra saw weaker response to promotions and higher-than-expected cost inflation. Price increase are expected to help in the second half of the year, and the despite the company's disappointing first half results, the firm reaffirms its full-year earnings outlook.

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