Turning Down the Volume

 | Feb 28, 2012 | 2:03 PM EST
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There are two surprising things about this market. First, the S&P 500 hasn't suffered a loss of more than 1% in more than two months. Second, despite the one-way action there is so little excitement among individual market players.

Prior to the crash of 2008-2009, moves like we are seeing recently would generate lots of load chatter about all the great stocks out there that will continue to go up forever. We see a little bit of that excitement with cult favorite Apple (AAPL), but we seldom see the sort of  excitement that we'd see in the past as market players uncovered new ideas and new themes.

It isn't only the anecdotal information about the mood of market players that is puzzling, but the fact that volume continues to contract as the market goes higher.  The theory is that institutional money should drive rallies, but there are few signs of support from the big money in the form of volume.

It is a constant worry to me the individual market players just don't seem to have the interest they have had in the past. There are still plenty of good trading opportunities to be had if you adapt to market conditions, but this market seems to have done its best to drive folks away.

What I wonder is if it is caused by the economy and the gut-wrenching recession we went through or is it caused by a structural change in the way the market operates. It is probably a little of both.

The best way to deal with it is to simply be aware of it. The market doesn't need upbeat individual investors to continue to grind higher for weeks at a time. In fact, it may be more likely to keep on climbing when there are so few folks who are anxious to embrace it.

It is very quiet this afternoon as we hold steady but don't gain any further traction.  I'm selling down some of the precious metals trades I discussed this morning and will keep looking for trades, but this lack of energy is making it very tough.


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