The market is higher, but on dramatically reduced volume versus last week’s levels.
Various short-term metrics point to probabilities favoring a resumption of the correction which began with the first trading day of May. Nothing huge, but further downside movement.
While it is widely known, and was widely referenced by the talking heads in the last two weeks, the “Sell-in-May-and-Go-Away” Wall Street adage actually does carry significant weight. As I mentioned earlier, while exact starting dates vary slightly the research from sources I regard highly (and my own work) point to very good multi decade results being achieved by selling after the first few trading days of May. We are at that point now. While I believe that the major trend is still up and that a bull market peak is likely still months away at a minimum, this possible further correction seems worth playing.
Finally, could the news background get much worse? The Germans are openly talking about Greece leaving the E.M.U.; Greece’s debt is downgraded, again; the True Finns party is blatantly against any bailouts and it only takes one E.U. member to derail the bailout plans; crude oil is climbing again (and I just paid $4.96 per gallon for gas).
I could keep going, but you get the point. Add in the fact that earnings season is winding down so that market support is fading into the background and there is virtually no economic news due out until Thursday.
With all of the above and more in mind, I am strongly leaning toward establishing some “shorts” for a 2 to 4 day trade.