Volume - MIA

The market continues its bullish bias. On Monday the market greeted the newly passed government run health care program with an up day. Bigger government and higher taxes used to be considered a bad thing for business and the economy. We seem to be in a new era.

The only problem with Monday’s rally was that once again, volume was missing in action. Comparing Mondays NYSE volume of approximately 953 million shares on an up 5.91 point day, to Fridays 1.95 billion shares on a down 5.93 point day, I conclude that all things are not equal. Yes, Friday was quadruple witching day and volume does get exaggerated, but it was more than double Monday’s up volume.

Just like higher taxes and big government has an effect on the economy – so too does volume have an effect on the conviction of stock moves. When there are fewer investors on the upside – should something spook those participants at a later date, the rush to the exits could be faster and possibly more dramatic if that day comes.

But when is that day? That is the million dollar question. Governments globally are running today in a similar fashion that reminds me of the old Popeye cartoon character Wimpy, who used to say: “I will gladly pay you Tuesday for a hamburger today.” Except instead of asking for a hamburger, global governments are asking for more money and of course, "Tuesday" would never come, and Wimpy constantly secured himself a free lunch. Thus the line is used to jokingly to indicate that governments of today seem like they are "borrowing" money without any real intention of ever paying it back.

This live for today, for tomorrow we may die mentality is driving the markets higher. We have created another huge government program. We continue to borrow from future generations and many statistics don’t show improvement. For example: It was announced today that sales of existing homes fell for a third straight month in February, pushing sales down to the lowest level since last July. There is concern that the fragile housing rebound could falter, making it harder for the overall economy to recover.

The National Association of Realtors said the weakness in sales depressed prices further. The median home price dropped almost 2% from a year ago levels to $165,100. The Fed is going to end its purchase of mortgage securities next week and the government’s home buyer credits will end in April. What will happen to housing when it is no longer subsidized? It may work on its own, but caution is the key right now.

We will also get more details about the fate of the Greek debt issue later this week. The rumblings out of Germany and the EU are pretty negative. We shall see if it is all bark with no bite, or will Greece be forced out of the EU and possible default on their debt. Once again, things may work out and the party may continue, but keep a close eye on the exit doors.