Stock markets are getting sloppy and appear rolling over. I've posted plenty of warnings about this given "normally" reliable DeMark monthly chart readings. Coincidentally it's curious these indicators present themselves as the Fed is winding down QE2 ("they say") next month and when the "sell in May and go away" maxim is present.
Previous stock market rallies have been propelled higher on ultra-light volume following heavy Fed liquidity injections (POMO) to Primary Dealers. These rallies have been met by comparatively higher volume sell-offs masking deteriorating conditions.
Evidently, the weaker dollar combined with liquidity injections has been bullish as multinational company earnings swell as a result. Brief dollar rallies, such as Friday, have caused sell-offs.Higher risk sectors, whether commodities or emerging markets have paid the heaviest price given intraweek volatility. Some signs of a rollover are present with talk of stagflation and increased volatility in commodity markets. The latter have been especially manipulated to suit some purpose known only to insiders since the statement from the CME below is baloney: "Margins are set as part of the neutral risk management services we provide. They aren't a means to move a market one way or another, or to encourage or discourage participation from one kind of market participant or another. Rather, margin is one of many risk management tools that help us assess overall portfolio risk to protect market participants and the market as a whole." Kim Taylor, CME We suspect the phrase "protect market participants" includes, in this instance, some large banks heavily short silver that were being squeezed. And, that's just the beginning of the potential suspects. Despite all the volatility most market sectors closed the week flat which reinforces the notion that it truly is, even excluding congress, the greatest show on earth. Stock sectors with the highest betas or volatility (EMs, BRICs, Small Caps and so forth) experienced the greatest losses on Friday while stodgier sectors (Consumer Staples) were less affected. Volume was a little heavier than on recent days but still lower than Thursday. I guess some of Day Boyz headed to the Hamptons early. Breadth per the WSJ was quite negative. You can follow our pithy comments on twitter and join the conversation with me on facebook. Continue to U.S. Sector, Stocks & Bond ETFs