Another day and it was more of the same, with the market averages continuing to post solid gains. It’s been great to be long stocks for the past few years, but for new capital, the lack of pullbacks is a tougher pill to swallow. More on the sort of tough stance it is to be super-bullish below.
Earnings were out in decent force today. We did see some profit-taking on the heels of their earnings releases, including Tim Horton’s (THI) and C.H. Robinson Worldwide (CHRW). Walt Disney (DIS) had been lower early on, but the stock managed to close nearly unchanged. There was some buying on earnings announcements as well, with stocks like Toyota Motor (TM) and Whole Foods (WFM) spiking higher.
It is always interesting to watch a couple of market pundits engage on what the proper valuation should be for the markets. One interesting discussion that I have been thinking about for years is how little impact volume actually has anymore on the direction of the markets.
It used to be that traders could get a fairly reliable take on the market direction based on accumulation (shares rising nicely on higher-than-usual volume) and distribution (shares dropping on above-average volume). Fast forward to the last couple of years, and that metric has been basically thrown out the window for the most part. We see a highly unusual trend these days: shares tend to sell off on heavier volume, but snap right back up on lower volume. Mention this factoid to bullish market players and their tempers rise. That’s not to say they haven’t been right — the markets have been extremely bullish since the March 2009 lows. But when the talk on volume gets nothing but sneers, it makes you wonder how exactly traders are navigating through this bizarro market!