The market was walked up by the futures and the HFT bots on light volumes for a rally that largely fell apart into the close. A stiff breeze will knock this market over, but it might very well take a rather stiff one, because there is little selling, and it seems light human participation in the markets at the moment. The only volume that appears is on the downdrafts. That is a recipe for disaster.
The Conference Board confidence measure today was very low as I had expected given the Michigan result, and the markets shook it off.
Most of the economic news this week will be a prelude to Friday's Non-Farm Payrolls report. The Fed Minutes were illuminating.
I think we need to be prepared for a higher than normal chance of a 'significant dislocation' in the financial system between now and the end of the year. That is still less than even probability however. If the government continues to gridlock on divergent extremes then the probability becomes higher.
What actual shape this 'break' might take I do not know, and will not care to speculate in detail. I am judging by the obvious strains in the real economy and the markets.
