As you all know, the trading volume has been very light since late December 2011. Light trading volume will generally favor the upside action in the stock market. For years now, the volume has been extremely light when the market indexes trade higher. The heavy volume comes when the selling begins. Everyone should remember the old market adage that states, never short a dull market (light volume). In this light volume trading environment there are three stocks that are controlling the entire stock market. These stocks are J.P. Morgan Chase & Co (NYSE:JPM), Apple Inc (NASDAQ:AAPL), and Exxon Mobil Corp (NYSE:XOM). Sure, there are other important market leaders such as Goldman Sachs Group Inc (NYSE:GS), Amazon.com Inc (NASDAQ:AMZN), and Google Inc (NASDAQ:GOOG), however, they are not carrying the same weight as the first three stocks mentioned.
J.P. Morgan Chase & Co (NYSE:JPM) is the leading financial stock at this time. This company was the first financial stock that announced an increase in it’s dividend. Every analyst in the market is giddy over this stock right now. Just follow this stock for a while and you will see how the major stock indexes follow it around like a dog chasing it’s tail.
Apple Inc (NASDAQ:AAPL) is the now the most loved stock in the world. This stock now has the largest market capitalization in the entire stock universe at $557 billion. The euphoria surrounding AAPL stock is still very well intact at this time. The stock also dominates the action in the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ). It is also a major weighting in the S&P 500 Index with such a large market cap. As long as Apple Inc holds up it will keep the major stock indexes from falling.
Exxon Mobil Corp (NYSE:XOM) is the largest integrated oil company in the world. This stock’s market capitalization is now second to Apple Inc. The stock has held up very well as of late despite the sell off in many other leading oil stocks such as Chevron Corp (NYSE:CVX). Exxon carries a lot of weight in the Dow Jones Industrial Average, and the S&P 500 Index. If you keep Exxon Mobil steady you can keep a large part of the market steady. Every trader and investor should keep an eye on this stock.
Traders must follow these three stocks very closely. If these three market leaders start to break down the major stock indexes will follow. At this time, these three stocks have held up very well. In such a light volume environment all the large institutions have to do is simply support these three stocks and the major stock market indexes can hold up fine. As long as the U.S. Dollar Index drops intra-day, which it will usually do, the major stock indexes will simply float higher on a continued basis.