IT’S ALMOST APRIL 16…

For months I’ve been babbling about the stock market and Tax Day. The theory is that markets levitate based on individual investors contributing to their tax-deferred retirement accounts and that cash inflo moving into stocks and stock funds. It is the unwritten but widely understood rule that is the cause of the “sell in May and go away” phenomenon. After all, odd-lotters are notorious for buying the excitement (top) and selling the desperation (bottom) over and over again.

But things have changed a bit this time around. The individual investor is widely absent from the stock market in most every way except through his retirement accounts. Hence the decreasing average daily volume, now about half of what it was even last year. I could prattle on about Market Makers and High Frequency Trading but I’ll spare you.

Well, its almost April 16 and most of you have already contributed to your retirement account. And it just so happened that we have experienced our first little correction of the year, after another ridiculous straight up market based on expectations that the economy is getting better, backstopped by the Central Bankers Free Money Regime in Perpetuity.

Sixty SPX points in four days. That little correction comes after literally weeks of technical negative divergences in many of the major indices and under-performance by this Bull market’s leadership; materials. Who cares as long as Apple and Priceline remain in the spotlight as market leadership and places to hide. Plus, new concerns over Europe’s solvency and a pause in Federal Reserve stimulus have the stock market a teeny tiny bit worried.

But even in this market where a photo upload site gets bought for a billion dollars, there are plenty of things changing under our very noses. Not only have material stocks been falling but so have precious and non-precious metals. And it’s all masked by the out-performance of the technology sector. And it is all done on ridiculously low volume.

We’ve been doing about 750 million shares on the NYSE per day. Let me break it down: 150m shares run in the first half hour, 150m at the close and 450m run from 10am to 4pm. That means that 20% is run in the first half hour, 20% is run in the two minutes after the close and 40% are run during the remaining six hours. It is bizarre, yet even when there is high volume selling, it dries up the very next day as low volume buying returns.

Now is probably the time to get much more cautious. I believe that Bernanke’s mission in life is to “digitize new liquidity” but even he may have to take a pause for the time being. He is not done, not by a long-shot. He will have to print trillions more just to keep the economies head above water and he will most certainly do so. But just like last year and the year before, the perception of a improving economy and an elevated stock and oil market will dictate that the middle part of the year is a great time to get your buy list ready while you’re on vacation.