Pay Attention to Europe and Our Trading Volume

Investors around the world are waiting on an EU decision. The Asian and European markets sold off yesterday as fears about a solution were put on hold. Our markets were all over the place but were more fortunate than the foreign markets.

The good news is our markets came off their lows of the day and closed near their highs of the day. The DOW and S&P finished in positive territory, but the NASDAQ closed in the red. Our markets are trying to find direction, but very time they try to rally, new sellers enter the markets.

Up Volume was in the mid 60s on the NYSE, but Down Volume barely won on the NASDAQ registering in the low 50s. Total volume was unimpressive on both exchanges. Compared to the recent volatility, it was a dull day.

The internals of the markets are weak right now after bumping up against the upper trading range. Until we get buying with an increase in volume, a sustainable rally is unlikely. However, this could happen if Europe agrees on a fix (even though it won’t work in the long run).

If the markets do rally, energy stocks should do well. On the radio show today, John Sheely, a commodities and forex trader, was talking about the high profit margins with the “crack” spread by refiners. Companies like Tesoro and Valero are worth examining.

But again, unless there is an agreement in Europe, the markets will struggle to go higher. In fact, they will likely go lower and selling could accelerate. Pay close attention to volume, that will be the key.

In overnight trading (Thursday 9:20 p.m. CST) the Asian markets are mixed. Gold, silver, and oil are all in positive territory. The US dollar is flat against the Euro the Yen , but down against Pound.

With the exception of the London exchange, the European futures are in negative territory. Our US futures are in positive territory. The DOW futures are up 29 points, the S&P futures are up 3.2 points, and the NASDAQ futures are up 6.75 points.