By Nicholas Santiago on August 9th, 2010 3:03pm Eastern Time
Today the major market indexes followed their usual pattern. The SPDR S&P 500 ETF NYSE:SPY) dipped lower during the first half hour of the day only to rally higher on light volume for the rest of the session so far. There were a couple of factors in the market that were telling us that the markets would trade this way. The first was the light trading volume ahead of tomorrow's highly anticipated FOMC meeting. Light volume always favor the upside action. Hence the old market adage, “never short a dull market”. It can't get more dull than this. The second and more important factor was the action in Exxon Mobil Corp (NYSE:XOM).
Exxon Mobil Corp (NYSE:XOM is the largest stock in the market with a market capitalization of $318 billion. Therefore, when the largest stock is strong it is a safe bet that the stock market will be strong as well. The stock is also a major Dow Jones Industrial Average component. While the Dow Jones Industrial Average is a price cap weighted index and not a market cap weighted index Exxon Mobil Corp still carries a lot of weight when trading above $60.00 a share.
The important point to remember here is that when Exxon Mobil Corp trades higher on the session rarely will the stock market trade lower. This stock is a very good stock market barometer and should be watched and followed even if it is not traded. When Exxon Mobil Corp trades lower on the session watch how the market remains under pressure.
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