Watch These Price/Volume Relationships For Clues
It was
wire-to-wire up yesterday, as
the media basically said we have destroyed two more divisions and the fall of
Baghdad is imminent. They, of course, don’t say what destroy means.
Nevertheless, positive perception and new monies for this quarter were enough
for the moonshot, accelerated by whatever short covering there was and
bond-to-stock swap allocations. As for me, I have started to put synthetic
straddles on again and will continue to do so into any continuation to the
upside today.
Low-to-high, the
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SPY |
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PowerRating)s have gained 5.2% since the 84.40 Monday low, while the volume was on
the light side as price advanced. On Monday, the 84.40 low day, the volume was
61 million, followed by an 86.39 high day volume of 54 million, and then
yesterday, an 88.77 high on volume of 50 million. You always must be aware of
any developing price/volume relationships.
NYSE volume was 1.5
billion, volume ratio very strong at 87, with 1.3 billion up and only 199
million down, breadth was +1412. The technology sector was the big gainer, led
by the
(
SMH |
Quote |
Chart |
News |
PowerRating)s, +6.8%. FYI: I don’t consider airlines and telecoms major
sectors and won’t go near them. I don’t like to trade companies on the verge of
Chapter 11. The NDX
(
$NDX.X |
Quote |
Chart |
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PowerRating) was +4.0%, Nasdaq
(
$COMPQ |
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Chart |
News |
PowerRating) +3.6%, and
both the SPX
(
$SPX.X |
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PowerRating) and Dow
(
$INDU |
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PowerRating) up about 2.6%.
The
(
BBH |
Quote |
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News |
PowerRating)s broke out
yesterday, but as most everything else, it was a gap opening through 95.50 and
there was no pullback to give us a second entry chance on a trade through 95.50.
That was, of course, the same as the
(
QQQ |
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PowerRating)s, SPYs and SMHs.
The SPX closed at 880.90,
and the entire moonshot was from 9:30 a.m. to 11:00 a.m. ET. From there, it was
a 5 point narrow range into the close between the intraday high of 884.57 and
879.50. 879.26 is the .618 retracement to 935.05. 883 is the .38 retracement
between 954 and 769, and 884 is the .50 retracement to the 1987 low. The upside
awareness levels for the SPX are on the chart in my
March 31 commentary. The 200-day SMA is now 886.35, the 200-day EMA is
908.30.
As I do this, the futures
are up big, early green, with the S&Ps +11, the Dow +108 and Nasdaq +16. Crude
oil is also down again today. So, we are looking at gap openings again, which
take away most of the move, as the futures did yesterday. The last feel-good war
day was March 21 when the SPX closed at 896, +21 points, vs. the +22.42 points
yesterday. The NYSE volume that day was 1.8 billion shares, bolstered by the
option expiration volume. The Monday after this expiration saw the SPX decline
32 points on only 1.3 billion. Doesn’t look like that will happen today, but
there could very easily be some Trap Doors and volatility band plays to the
short side, especially since the major indices all closed up and around their
2.0 volatility bands from yesterday.
Have a good trading day.
Five-minute chart of
Wednesday’s SPX with 8-, 20-,
60- and 260-period
EMAs
Five-minute chart of
Wednesday’s NYSE TICKS