Wall Street robots create best performing month in a year even as billions of dollars left the equity market, no trading volume and poor fundamental economic data

The exploits of Wall Street's mathematician robots churn out a positive month. July yielded the best performing month in a year as the S and P 500 gained 6.88% while the Dow gained 7.1%. These "annual-like" gains occurred even as:

• billions of dollars were withdrawn from the U.S. equity market
• trading volume was anemic
• fundamental economic data shows clear signs of a slowdown

Significant Dollars Removed from the U.S. Equity Market

Investment Company Institute (ICI) reports $8.797 billion was withdrawn from domestic equity funds through 7/21/10. This represents an average of $2.932 billion per week with yet another week to be reported. For the entire month of June, ICI reported $8.076 billion withdrawn from domestic equity funds and their first report of June included the final 5 days of May.

From the week ending May 5, 2010 through the week ending 7/21/10, $40.515 Billion has been withdrawn from the U.S. equity funds.

Anemic Trading Volume

The S and P 500 clocked in a 70.89 point (6.88%) gain for the month of July on an average daily trading volume of 4.513 billion shares. During the month of June, the S and P 500 was down 58.70 points (5.39%) on average daily trading volume of 5.005 billion shares. The S and P 500 launches 6.88% while month over month average daily trading volume falls 9.8%.

Grandpa's interest piqued while dissecting the curious 6 consecutive up days in the S and P 500. From July 6th through July 13th, the S and P 500 gained 72.76 points (7.1%). This gargantuan move occurred on a paltry 4.290 billion average daily trading volume (223 million fewer shares per day than the July monthly average).

More evidence of manipulative trickery is evident after comparing the two biggest July up days to the two biggest down days in June. The two biggest down days in June (4th and 29th) collectively produced a loss of 71.28 points on average trading volume of 6.159 billion shares per day. The two biggest up days in July were contrived on 1.280 billion less shares per day.

Grandpa's "granddaddy" validation of manipulative and deceptive components became even more evident when May was included in the analysis. The down and dirty:

S and P 500 Monthly Recap

• July 2010 UP 70.89 points (6.88%) on daily average daily trading volume of 4.513 billion shares
• June 2010 DOWN 56.70 points (5.39%) on average daily trading volume of 5.005 billion shares
• May 2010 DOWN 92.28 points (8.2%) on average daily trading volume of 6.383 billion shares

July's 6.88% gain occurred on average daily trading volume of 492 million fewer shares than July and 1.87 billion fewer shares than May.

Ben Bernanke's "Unusually Uncertain" Economic Data

• Weekly initial jobless claims averaged 457,000 for the month
• Pending Home Sales DOWN 30% month over month
• Non-farm payrolls for June DOWN 125,000 on a consensus estimate of down 100,000
• Factory Orders DOWN 1.4% versus consensus estimate of down 0.6%
• ISM Services 53.8 versus consensus of 55 (prior was 55.4)
• Trade Deficit -42.3 billion versus consensus estimate of -39.4 billion (prior -40.3 billion)
• Retail Sales -0.5% versus consensus estimate of -0.2%
• Existing Home Sales 5.37 million versus consensus estimate of 5.09 million (prior 5.66 million)
•  New Home Sales 330,000 versus consensus estimate of 310,000 (prior revised to 267,000 from 300,000....267,000 lowest level on record)
• Consumer Confidence 50.4 versus consensus estimate of 51 (prior raised to 54.3 from 52.9)
• Durable Orders -1.0% versus consensus estimate of +1.0% (prior reduced to 1.2% from 1.6%)
• Q2 GDP 2.4% versus consensus estimate of 2.5%. Q1 revised to 3.7% from 2.7% while the government revised down GDP figures for 2007, 2008 and 2009

Once Wall Street repositions the roulette table magnets, the casino will open for business as usual Monday at 9:30 am EDT. The High Frequency Traders have replenished their pantry with Cheetos and Red Bull and will surely commence with yet another upward romp in the market. After all, they (i.e. robotic computer gamers) are the only one's trading the market.

Another "annual-like" return is assured for the month of August predicated upon economic data continuing to reflect a downward slope, another $10 billion is withdrawn from the U.S. equity funds and volume drops another 10%.

Mr. and Ms. Market are waiting patiently for the average retail investor to come off the sideline and provide the catalyst for another 5 to 10% upward move. When they sense they have sucked in the final flock of lambs, you can be assured the market will sell, once again proving to the retail investor who controls the market.