We ended the week the same way we started it: with extremely slow action. We had some option-related activity that spiked up volume today, but we dripped lower all week and lost nearly 3% -- though we were oversold and had a decent setup for some sort of bounce. What was particularly unpleasant about the action was that every little bounce attempt fizzled out almost immediately -- there was no momentum, no leadership and no energy. The biggest move we saw this week was an ugly breakdown in gold, silver and commodities.
Many folks, including me, have been looking for some positive seasonality to kick in, but there was no sign of it. Despite lots of negativity, plenty of underinvested bulls and the need for relative performance, the bulls never kicked into gear. As the week progressed, many were happy to sell into what little strength we had.
Typically, the biggest and sharpest spikes occur in a market environment like this simple because the strength is unexpected, but for that to work we need some sort of spark to start things running. This market never was able to run enough to draw in buyers and push bears to cover.
We have nine more trading days left in 2011 and the volume is going to slow even more as the holidays approach. Can the bulls pull it together and manage at least a little bit of a rally? I believe the chances of that are good, but you can bet there will be plenty of folks lined up to sell into strength if and when it develops.
Unfortunately, the biggest positive this market has going for it is that everyone seems to hate it. That could be a great contrary indicator but we need something to entice the pessimists to question their views, at least for a little while.
I'll keep watching and waiting for the opportunity to jump into a Santa rally, but this market is doing a good job of wearing everyone out.
Get that Christmas shopping done this weekend. I'll see you on Monday.