Looking for an Emotional Rescue

 | Feb 15, 2013 | 8:31 AM EST
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Nothing happens. Nobody comes, nobody goes. It's awful. --Samuel Beckett, Waiting for Godot

Seldom do market players agree to the extent that they do right now, but everyone is painfully aware how slow and dull the trading has been lately. We keep waiting for something dramatic to happen and slowly drift higher with no emotion or energy.

Even news about a weak European economy yesterday morning was ignored and stocks slowly pushed back higher all day for minor gains. It was impressive that the market recovered so easily, but the lack of excitement makes trading extremely challenging.

My advice lately has been not to anticipate what the market is going to do next but embrace what is happening. That is working just fine but, unfortunately, there isn't much action to embrace. Many stocks are hitting new highs and all minor dips are bought, but the lack of strong moves is driving many traders crazy.

The bad news is we have to sit and wait for something to chase. Keep digging for trades, but recognize that when things are this slow, it is going to be extremely challenging to be aggressive.

My biggest worry is that this action is going to drive away even more traders than it already has. The loss of individual traders has had a devastating impact on trading, but many people fail to realize how much things have changed because the indices continue to trend higher. There has been a tremendous change in individual trading over the last few years and extremely dull action like we have right now doesn't help matters.

A Bloomberg article this morning about JPMorgan laying off traders and analysts says that trading of equities at the 10-largest investment banks is down 40% from 2008. I assume that it is down even more for individual traders. That sort of trading has largely been replaced by high-frequency computerized trading, which flourishes on fractional price changes. The computers don't need to shake things up to have better trading; they knock out millions of trades for pennies and do just fine.

All we can do is sit and wait for some emotion to kick in. It will happen sooner or later, but I hope that there are some traders are left when it occurs.

We have another very slow open. Keep in mind we have a three-day weekend and volume is likely to slow as folks hit the exits early.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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