The Invisible Hand Props Markets

It’s said loud and clear on the Street that clients and investors in general aren’t buying this rally.

Low volume suggests this. Tuesday markets were weak early given BREXIT worries but then out of the blue buyers appeared boosting markets well off their lows.

Wednesday stocks opened weak once again but then found their footing as given mostly weak economic data and rallied off their lows and closing higher.

The data contained we overseas data from China (PMI Mfg Index was still weak hanging on to a flat reading at only 50.1) while Europe PMI Mfg Index readings fell to only 51.5 vs prior 52.1).

When U.S markets opened stocks were met by mixed to weak economic data. PMI Mfg Index fell to flat 50.7 vs 50.8; ISM Mfg Index was up slightly to a flattis 51.3 vs 50.8; Construction Spending fell to -1.8% vs prior 1.5%; and, then was the Beige Book which according to the Fed showed tighter labor market conditions. An open door to an interest rate hike in July but not June? Sounds like flimsy reasoning to me, but then I’m not the invisible hand behind the curtain.

It might go along with the old farmers’ adage, “The thing you know best is what you like least”. Count me in. Nevertheless, like other trend-followers, I have stay long for now even if, like others I have to hold my nose at the entire affair. (sigh)

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).

Volume may set a new record for light for a mid-week day with lots of news. Breadth per the WSJ was positive but not so much for Money Flow. 

Chart Of The Day

Given the light volume sharp advance from last week, today’s two-way action was impressive holding things together.

But, the overall crummy economic data doesn’t promise an increase in interest rates.

That said nothing should surprise investors going forward.