The stock market continues to move higher. Yesterday two important averages moved to fresh recovery highs. The NASDAQ 100 finished in new high ground while the S&P 500 marked a closing high.
As you might expect on a semi-holiday volume was light. But that continues a disturbing trend of an absence of participation on the part of institutional investors. A key argument for continuation has been that reluctant money managers who have doubted the rally’s staying power have to throw money at the market in order to stay competitive with their bogies. But if that were the case we should be seeing significantly higher volume as the Dow last week and now two other major indices move to fresh highs.
And speaking of highs, the 52 week highs list continues to be negatively divergent from the last trip into new high ground. Last month we saw nearly 700 52 week highs. Now, with all major indices save the NASDAQ in new high ground, that number is less than 300,
This speaks to the incredible levitating effect on the markets of Fed induced liquidity and the subsequent dollar carry trade. History teaches that without more significant participation the market is vulnerable to a sudden and ugly reversal, yet day after day the evidence on our screens defies that notion.
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