Markets began the session with loses as the shadow of our recent breakdown in internals dominated early trading. The lack of volume/conviction however caught up with the intraday trade effectively negating the extent to which markets were able to follow through on a more punctuated move lower. The celebration of the Jewish Yom Kippur holiday was the principle theme behind the contraction in volume. The Holy Father’s first visit to the United States also appeared to have provided a therapeutic respite, or distraction, for traders.
More than anything else, it was the sharp contraction in volume on the day that defined the trading session. Volume on the NASDAQ fell 21.03% while volume on the NYSE slipped 15.41%. Internals were mixed to even between winners and losers. That said, all three major indices did lose ground on the day.
Losses were so minor, for a change that it perversely felt as if we walked away from the closing bell with a victory of sorts. The worst performing index was the Dow Industrials, slipping a modest 0.31%. The S&P 500 and NASDAQ moved fractionally lower losing 0.20% and 0.08% respectively. Even the PMI data that was released (meeting consensus) had virtually no impact on the semi-dormant trading session.
A pause in our trend does not equal a reversal. Yesterday’s trading session is best described as that, a pause. As I suggested yesterday, any meaningful attempt at a rally in the near term will likely be met with stiff resistance. The path of least resistance remains lower for all the reasons outlined in yesterday’s note. Volume should return to more normal levels today and if it does we will get a clearer indication of that.
Economic data scheduled for release today begins with Durable Goods Orders at 8:30 AM EST, followed by Jobless Claims, the Chicago Fed National Activity Index, Bloomberg Consumer Comfort Index, New Homes Sales, EIA Natural Gas and the Kansas City Fed Manufacturing Index. Though all of this data is very topical and important in terms of gauging the status of our economic health, it is the last item on the list that will garner the most attention. Fed Chair Janet Yellen is scheduled to speak at 5:00 PM EST.