Regardless of rhyme or reason, the S&P 500 broke out like a rocket to ATH’s on Monday. On Tuesday, though, the ship suddenly fell back to earth for what historically has always been pretty much been a good reason for doing so… lack of volume. And over on the Nasdaq, the very same fall in volume is the definition of what often constitutes a “Dead Cat Bounce,” yet for seemingly no rhyme or reason, bulls continue to openly mock anyone who takes the other side. But there’s really no debating anyone who has already made up their mind, as they will always find a way to justify their position (just ask any of those “flat earth” folks out there).
Whether you choose to accept it or not, it’s the big institutions that ultimately fuel the market, and according to volume over the past few weeks, their presence has been mostly absent leaving retail investors in control of the wheel. Perhaps some of those drivers need to be shaken out before a move higher can gain traction. Until that happens, bulls that live in glass houses may want hold off throwing stones. -MD
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