Volume

Market sentiment has been eroding along with profits. My indicators are now at some of the lowest readings seen since last fall. The biggest drag on the markets has been those areas that went up the most earlier this spring. These are the big three I discussed last week: Commodities, energy and especially foreign securities/markets. For the most part these markets have been hit harder than ours.

There has been a lot of commentary about a slowdown in volume over the summer. This seems likely for a couple of reasons one being that summer is traditionally a slower period as traders are often seen as being more interested in the beach than their screens. Midweek holidays such as July 4th this year and an August largely seen as unexciting should not help in the volume area.

Given the way the market has sold off in the last month I would think that we would need to see a real surge in demand to retrace most of what we've given up. However, the market is so over sold that it is likely that some sort of snap back in prices is possible short term and perhaps even a small rally through the early weeks of July. The markets globally started to sell off mid May and at some point a snap back rally is likely to occur.