Hey Onlooker, you are right on. Did you see the exit door slamming Thursday afternoon July 2 with what was downright miniscule volume?

I mean, it shut down the NYSE computer.

And then the following week. For chrissakes, if the 8 billion shares dumped was not a sign of lack of commitment, I do not know what is.

Just wait for the inside hand to pull the dump handle on this one. I mean, those vaunted new shiny stock buys will fall like a heavy rock off a steep cliff.

But only so far as the unseen hand determines is “reasonable” and not enough to spark any “panic”, just a “needed correction”.

I continue to think that because there are so many hot and weak hands* in the market right now that things can shift very rapidly and violently.

*(i.e. momentum players who will sell just as fast as they bought because they’re playing the short term trend, not a long term bullish thesis)

Once the sentiment reaches an extreme, as it seems to be now, there aren’t enough new buyers coming in and the momentum stagnates and before you know it the hot hands are driving it down. It seems hard to believe given the upside strength that the market has shown, but that’s what history shows and it’s why so many (like Hussman) won’t buy in with the waning volume and other weak internals.

Of course in the short run you look stupid for not being in and the perma-bulls start their blustering and taunting, which we’ve seen already.

TPC,

Do you believe that part of his thesis? Could the July low be broken without significant bad news? How bad would the news need to be to send the market to a retest of the March lows? Over the past several days, there have been an increasing number of predictions that the there will be a 20% to 30% correction. At the same time, there have been an increasing number of people who are predicting that the S&P 500 will hit 1,200 before long.

from the MarketWatch article:

A sharp decline in trading volume on the S&P 500 Index signals a looming test of last month’s lows, with the broad market indicator then destined to fall under its March low, according to one U.S. stock-market technician.

The decline in volume started on Friday and suggests the S&P 500 (SPX) will make a new low beneath its July 8 bottom of 869.32, probably next week — on the way to a test during September or October of its March 6 intraday low of 666.79, said Tony Cherniawski, chief investment officer at the Practical Investor LLC, a financial advisory firm.