Sam Collins

Volume Declining to Lowest Level of the Year

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Yesterday the U.S. dollar matched its prior low, but contrary to recent trends, the stock market opened down, too. The day started off with broad selling in response to weaker-than-expected U.S. housing starts and the analysts' downgrades of key technology stocks. By just after 10 a.m., the Dow Jones Industrial Average (DJI) was already off 75 points. 

The weaker dollar contributed in large measure to another new high in gold. The precious metal closed at its fourth-straight record high and helped the precious metals stocks to outperform the rest of the broad tape until late profit-taking trimmed the gains, sending many of the mining shares to the minus side.

But it was the financials' late-afternoon bounce from Tuesday's decline that in large part salvaged the day. Instead of steep losses by the Dow and S&P 500 (SPX), both closed just fractionally lower.

At the close, the Dow was down 11 points to 10,426, the S&P 500 was off half a point to 1,110, and the Nasdaq (NASD) fell 11 points to 2,193. 

The NYSE traded just over 1 billion shares with decliners ahead of advancers by 8-to-7. On the Nasdaq, 613 million shares were exchanged with decliners ahead of advancers by 8-to-5.

December crude oil rose 28 cents to $79.42 a barrel, and the Energy Select Sector SPDR (XLE) fell 23 cents to $58.44. 

December gold rose $1.80 to $1,141.20 after topping at a new high of $1,153.40. The PHLX Gold/Silver Index (XAU) fell $2.72 to $184.68 as profit-taking in gold stocks dominated the afternoon's action.

What the Markets Are Saying

One noted analyst is convinced that the market is going to break higher because it has been tenaciously holding above its 20-day moving average. Another is equally convinced that the market is going to decline because it has broken below its major uptrend line. Both are correct in their observations, but wrong in their conclusions.

How could both be wrong if they are reaching opposite conclusions?  

Simply because they have no basis for those conclusions.