Low-volume breakout not to be trusted

Thursday left us higher and with strong market breadth but left us with lower volume. So this rise was on light volume which followed a distribution day. The rise did take us up out of the consolidation we spent 5 days in. But rising on light volume isn’t going to do us any favors. However, like yesterdays distribution day it is just one day and until we see more we can’t assume much. It is definitely a problem in the making if this continues.

Going into Friday we have a lot of economic data and so far this week we’ve seen very little reaction off data because it is coming in very bland. No real surprises or new news to work off of. Semi’s were strong Thursday and we can look for 467.10 as resistance then the swing high from 9/15 at 473.45. Banks are also nearing the swing high from 10/4 at 114.91, this is also an all time high for the sector. With this resistance so near on the top two sectors we need to be cautious.

Friday may see a light afternoon with folks awaiting bigger earnings to come next week and show the market the growth or lack of it that we can expect. The Dow is within striking distance of 12K and will be the next magnet up here. I will look for an early pullback then a drifting market for Friday.

Crude closed higher by 27 cents on the day to end at $57.86. Inventories rose this week to give us even more supply and not help put any ease into OPEC possibly cutting production. Gold made it into green territory and spent most of the day there closing at $580.30 +$3.80.

Some earnings for the week of September 9-13th Friday pre market GE.

Economic data for the Week of October 9 — October 13
08:30 Export Prices ex-ag., 08:30 Import Prices ex-oil, 08:30 Retail Sales, 08:30 Retail Sales ex-auto, 09:50 Mich Sentiment Prel., 10:00 Business Inventories.

ES (S&P 500 e-mini) Prior weeks data: H= 1363.25, L=1336 and C=1358.75. Weekly pivot and support/resistance data: PP=1352.75, R1 1369.25, R2=1380 R3=1407.25 and S1=1342, S2=1325.50, S3=1298.25. Pivot for Friday is 1368.25. Support: 1367.75, 1365, 1361.75. Resistance: 1372, 1373.25, 1375.5, 1378.25. Nice higher move today, gap and go days are never my favorite. But we moved from the range and that is good. Look for early pullback off the economic data then for a move up. It is Friday so expect a light afternoon and for the volume to come early and leave us late day.

Good trading to everyone.

Teresa Appleton has traded equities and options for
nine years and futures for seven. She founder and CEO of TradeLogic, LLC. For
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