NEW YORK (TheStreet) -- Have I ever mentioned the word "volatility" in reference to the stock market in 2014? Of course I have! Case in point: Monday.
The DJIA was down 124.48 points Monday morning, the S&P 500 was down 14.37, the Nasdaq was lower by 37.55 and the Russell 2000 was lower by 13.70 points.
By late morning, three of the four major indexes had recouped all their losses and turned green. The DJIA finished the trading day up 17.66 points at 16530.55 and the S&P closed up 3.52 points at 1884.66. The Nasdaq was the big winner today, closing up 14.16 at 4138.06. The Russell 2000 closed down 2.50 points at 1126.30.
The three big momentum stocks led by Apple (AAPL), Facebook (FB) and Netflix (NFLX) powered the markets higher. There is no question the hedge fund community still needs to own the momentum stocks right now.
The big negative in trading Monday was, once again, volume or lack thereof. The S&P 500 Trust Series ETF (SPY) had its third-lowest volume day of 2014, trading 71.6 million shares.
Where is the buying conviction in this market? As I have said on many occasion, when a stock market continues to rise on lower volume and unchanged volatility, that is bad. The market is getting closer and closer to falling under its own weight.
The Nasdaq and the S&P 500 are the two indexes that are in overbought territory, according to my algorithm process. The DJIA had a negative internal correlation. That simply means the DJIA index closed higher on Monday as the algorithm number was heading lower. The Russell 2000 continues to march to its own drummer. It has not participated at all with the other indexes, continuing lower.