I looked up the definition of apathy and it came out like this:
1. Lack of interest or concern, especially regarding matters of general importance or appeal; indifference.
2. Lack of emotion or feeling; impassiveness.
I think if there were a definition for our markets today you would find the exact same wording. But why is it happening? This is the best place to get a return on invested dollars. But there seems to be no action, no momentum, no trend and certainly no volume to speak of. Is it psychological?
Is something else at work? Something (someone?) has put a vice grip on this market that is not allowing it to move forward. Is there fear from an event to come? I have a hard time believing that to be the case. Players are mostly disinterested – Monday the emini futures had a very narrow nine point range. THAT’S IT! The VIX (measure of fear) is sitting under 17%. If anything the market is reflecting enormous complacency, and yet the market has fallen nearly 7% from its recent highs.
The fiscal cliff. If you don’t know about it you’ve been living under a rock for the past couple of years. It has had more play time in the media than a Lindsay Lohan run-in with the law. We don’t know the consequences of going over the cliff but everyone seems to believe it’s all bad. Okay, I get that. High debt, no plan to repay. All stuff that is known. But why is the market not concerned? Could investors and traders still be lurking around for the big rally if/when a solution is announced? As far back as the rubberband was stretched (Monday was a great example) the market is well oversold and now deserving of a good rally.
If the participants don’t care, don’t want to see it or hear it, don’t want to invest; well, we have a problem. Markets move on momentum and when there is none the liquidity dries up. That is when the institutions (who make up most of the action in the markets) will pack up their toys and leave the game. Then what is left? Not a great way to end the year, is it?