Holiday Float Begins

The markets are heading slowly north as predicted in my article yesterday. Feel free to view it here. This is classic pre-holiday action caused by the Federal Reserve and their POMO, along with light volume and an overbought Dollar short term. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $132.88, +0.49 (+0.37%) while the PowerShares DB US Dollar Index Bullish (NYSE:UUP) has fallen to $21.63, -0.08 (-0.37%).

The Federal Reserve and the powers trying to help a recovery have a vested interest in having the markets move higher into a holiday weekend. Remember, consumer spending is still the major driving force behind any recovery. Should the market tank into a three day holiday weekend like this, would anyone really be spending that extra money? More likely than not, a large drop into a holiday weekend would make the average American think twice about rushing out to those stores in search of great Memorial Day sales.

In addition, as Wall Street traders head out today and tomorrow for the holiday weekend, the markets remain open. This means that the volume remaining will be exceptionally light. Based on human psychology, the markets will naturally float neutral to higher. The psychological aspects of this delve into human nature and the way the we naturally have a positive outlook on life. With institutions gone, the retail investor is the main participant in the markets. Their outlook is to buy. In fact, most retail investors have never shorted the market. This yields the neutral to upside bias on light volume.

Lastly, the Dollar has surged in recent weeks, heading into a resistance area. The odds based on the extension move in the Dollar, favor a pull back. It is very important to recognize that the markets trade in the opposite direction of the Dollar. Therefore, a fall in the Dollar should help the markets trade to the upside.

The leaders today are clearly technology related with the Nasdaq pushing higher. Microsoft Corporation (NASDAQ:MSFT) is having a fantastic day, trading at $24.80, +0.61 (+2.52%). The weakest stocks continue to be the financial firms, barely squeaking out a gain today. This is one of the only sectors to be near or at their 52 week lows. Continued worry about regulation, lawsuits and more have hampered these stocks for months.

About Gareth Soloway 168 Articles


Gareth Soloway has been an avid swing and day trader since his days at Binghamton University where he studied Economics. After college, Gareth quickly excelled as a financial advisor, helping clients get their financial houses in order. While helping others gain financial independence, he continued to study the day trading and swing trading world, developing a unique market philosophy and proprietary methods. Following his work in the financial sector, Gareth went on to trade alongside professional traders. Unable to tolerate the hype of Wall Street any longer and having an amazing ability to profit using his developed techniques, Gareth Soloway decided to partner with his friend and colleague, Nicholas Santiago to form Chief Market Strategist Gareth Soloway serves as the president and CFO of InTheMoneyStocks.Com.

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