Volume, Holiday Volume, and Volume Warnings...
Volume in the broad market is a very important measure of market interest. On days when you don't have enough volume, a lot of stocks will have a difficult time behaving technically, and we need them to behave technically to trade them properly. Therefore, it is extremely important that we have a measurement to look at early in the trading session that gives us an idea of whether a lot of people are trading or if we're alone.
Since we trade a lot more technology and NASDAQ stocks than listed stocks, I have always used the NASDAQ volume as a guide to my trading. I look at the 30-minute and the 60-minute mark of the session to see how volume is going. Over time, I have made minor adjustments to the numbers that I like to see, but currently I use 250 million after 30 minutes and 450 million after 60 minutes as my guides. Those are average numbers, meaning you can expect average activity in the markets if you hit that level or higher, and that is good enough for trading purposes. Anything significantly under those numbers is trouble, and your trade size should be lowered accordingly.
If you hit 250 and 450 at the 30- and 60-minute marks, respectively, the market is typically on-track for a 2 billion share day of NASDAQ trading, which is good, average volume over the last several years.
What are examples of days that tend to have less volume than usual? Summer Fridays. Days before key news. Holiday periods.
Because this information is so important, we post notices to the Stock feed of the Tradesight Messenger right at 10:00 am EST and 10:30 am EST to let our subscribers know how volume is tracking. In addition, these items are posted to our Twitter feed.
The last few weeks of the year are typically characterized by lighter-than-normal volume due to the variety of Holidays around the globe. The last week of the year, in particular, typically sees a 20% drop-off in volume and many traders take that week off. However, even earlier in December can see lighter volume, so it is important to pay attention and track this number. We are currently experiencing light volume, despite the fact that this is triple expiration week in December. Usually, volume drops off AFTER this Friday, but we saw only 1.7 billion NASDAQ shares the last two days, which is very light.
If the volume after 60 minutes is less than 400 million (which is not close to the 450 million average number that we like to see); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES we try to post a humorous title for the volume warning in the Messenger, just to give people a little something to chuckle about since the market isn't that interesting.
Be sure to track volume and adjust your trading accordingly. The market doesn't care about you, but you should care about the market if you want to be successful.
Market Preview for 12/16/10
The SP suffered more leakage. Price declined by 5 handles, but never really developed any downside momentum. The 10ema was neither breached nor tested. That is the next level to watch. The SEEKER exhaustion signal is still active.
Naz was lower by 12 and did test but not break the 10ema. Fibs on the chart have been reset from swing low to high on a closing basis. A settlement under the 10ema will put the static trend line in plat at 2150. Watch the CCI for a break under the zero line which would imply that negative momentum has developed.
Multi sector daily chart:
The 10-day Trin is curling up but remains below the 0.85 overbought threshold. The broad market still has a considerable amount of energy that could be released to the downside.
The BTK swept but did not close above the trading range. The index has spent a considerable amount of time consolidating and could easily challenge the April highs if a breakout follows through.
The OSX has an active SEEKER exhaustion signal in place and is threatening to break the 10ema.
The BKX was weaker than the broad market as this lagging sector was sold. There is an important area just below where the 200dma and 10ema converge.
The SOX got hit pretty hard closing the day weaker than the Naz. The April high is a very key area (red line). A break under this area could accelerate the downside momentum. Note that the CCI breeched the zero line.
The XAL is breaking and lower prices are coming. The index closed below the recent support level and the 50dma.
The XAU was the weakest major sector--down almost 2% and near a very key support area at 220. Note that the SEEKER is one bar away from an exhaustion signal.
Gold:
Oil:
Stock Calls Recap for 12/15/10
With each stock’s recap, we will include a (with market support) or (without market support) tag, designating whether the trade triggered with or without market directional support at the time. Anything in the first five minutes will be considered WITHOUT market support because market direction cannot be determined that early.
Off the report, SOHU triggered short (with market support) and worked:
MRVL triggered short (with market support) and didn't have enough time to go either way, was starting to work at the close, but we won't count it either way to be fair:
Rich's JOYG triggered long (with market support) and worked:
GOOG triggered short (with market support) and worked:
Rich's NFLX triggered long (with market support) and worked for over a point:
Rich's AIG triggered short (with market support) and worked enough for a partial:
His GS also triggered short (with market support) and worked enough for a partial:
So ignoring the one that triggered late and didn't have a chance to get moving either way, that's six triggers with market support and all of them worked.
Forex Calls Recap for 12/15/10
Everything was in the GBPUSD, so we'll just post that review here.
Finally, a carry over trade that kept going. The GBPUSD trade from yesterday is still going, currently almost 300 pips in the money. In addition, a new winner on the GBPUSD for 200 pips. See GBPUSD below. New calls tonight and Chat as we head into triple expiration.
Triggered short at A, note that it did not stop at B if you followed the proper rules as the highest bid was exactly 20 pips above the LBreak and stop should be over that. Hit first target at C and beyond. Currently, this trade is 200 pips in the money with a stop over 1.5600, and we're still short from the prior session almost 300 pips in the money, same stop on all of it now:
Market Preview for 12/15/10
The SP posted a measuring day even after the FOMC announcement that failed to impact the futures. Tuesday was an outside day but the nominal price change negates the impact of a directional move. Price exceeded the prior high by one tick but never threatened the risk level from the active SEEKER exhaustion signal. Wednesday is 2 days until the final option expiration of 2010 and also the CPI number for December. There could be some decent movement and don’t for get to respect a bias that develops after 10am.
Naz failed feel the effect of the completed 9 bar run and closed about even. Many of the high flying index members were considerably weak but some of the low beta heavy weights like ORCL buffered the other losses.
The 10-day Trin continues to show that stocks are very overbought.
We haven’t recently looked at the Dow industrials. Price is grinding against a very key level at 11,500. In the two prior trips into this area, the index took more than 24 months before exiting the range. At this time we have only been in this price range about half as long. There might be some more work to do before a legitimate resolution.
BTK was top gun rallying near the high of the range.
The XAU posted an inside day:
The OSX tried a new high but was rejected. The 13 exhaustion is still active. If the group rolls the market is in trouble.
O
The SOX was notably weak. A settlement under the 10ema will turn the chart short-term negative.
The BKX was the last laggard down 1.5%:
Oil:
Gold:
Stock Calls Recap for 12/14/10
With each stock’s recap, we will include a (with market support) or (without market support) tag, designating whether the trade triggered with or without market directional support at the time. Anything in the first five minutes will be considered WITHOUT market support because market direction cannot be determined that early.
Off of the report, XRAY triggered long (without market support due to the opening five minutes) and worked:
NKTR triggered short (without market support) and didn't work:
In the Messenger, Rich's JDSU triggered short (without market support due to the opening five minutes) and swept the trigger, but then triggered short (with market support) in the afternoon and worked:
His AAPL triggered short (without market support) and didn't work:
AIG triggered long (with market support) and worked:
Rich's OPEN triggered short (without market support) and worked great:
FSLR triggered long (with market support) and didn't work:
Rich's JPM triggered short (with market support) and worked:
His CRM triggered short (with market support) and worked late:
All together, that's five triggers with market support, and four of them worked. There were also some nice winners without market support.
Forex Calls Recap for 12/14/10
A better-than-expected night of activity ahead of the Fed announcement. Two triggers, one worked (and still working); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES one stopped for 25 pips. See GBPUSD below. New calls tonight, but CPI in the morning is one of our big three.
None of the Value Areas that were set up triggered, so this came down to just the GBPUSD:
Triggered long at A and stopped for 25 pips. Triggered short at B, hit first target at C, still short with a stop over the entry:
Market Preview for 12/14/10
The 13 exhaustion signal is still active. Monday the SP testes this key level and failed. Since the SP futures settled higher on the day but below the open the chart now has a range high camouflage sell signal. This was a clear distribution day and the bulls may be on notice. Note that the lower high on the CCI could be telegraphing that the move is losing momentum
Naz closed lower on the day and not positive like the SP did. Many of the high beta names were very weak, i.e. NFLX and the like. On the daily chart the Naz recorded day 9 up which completes the minimum requirement of the SEEKER setup phase. The CCI continues to leak.
The 10-day Trin is catastrophically oversold. I don’t ever recall it closing below 0.60. If the bulls decide to step back, or if some other catalyst weighs in, there could be a waterfall of profit taking and a classic bid vacuum. Buying too early in the next dip will be disastrous. Keep looking clean breakdown levels until the Trin gets some relief.
Multi sector daily chart:
The OSX was top gun, +3 on the day. Price has had a very linear uninterrupted advance and has now recorded 13 bars up and a SEEKER sell signal. Move stop up and look for reversal opportunities.
The XAU was higher on the day but did not record a new high on the move.
The BKX swept the prior high but was unable to advance with the full 9 bar run holding it back. The financial index has not closed above 51 since May.
The XAL is close to break down below the 50dma and below the recent lows. Set an alarm for a break under 47.
The SOX posted a range high outside day down. This is the sector to watch tomorrow. Downside follow through will weigh heavily on the broader NDX100. A break and close under the April high around 495.50 will be a game changer.
The BTK….
The Dow Transports (TRAN) posted a range high outside day down:
Gold:
Oil:
COT 12-10-10
Hi Traders,
It's "Brrr cold" here, in Tampa Bay: a balmy 44-degrees... and it's not even 7:00 pm. Yes, it may be time for a move south. And, that's about all I can say about that. Okay, let's stop messing around and get to the COT.
Click on this link for the latest COT charts.
The US dollar has lost a little footing, but overall, the markets only look like they're correcting, meaning, I believe the dollar will continue to move higher. From a fundamental view, while the US economy isn't exactly on solid ground(the understatement of the year?); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES Europe, with Greece and Ireland having already been thrown a life jacket, Spain, Portugal and Italy are off the boat and furiously treading water. And, this is what everyone is looking at. So, the US is kind of "off the hook" for the moment, or at least not in the spotlight. Note the specs are selling the euro and the commercials are buying right now (this is not just euro vs. USD, but all other currencies).
Two commodity currencies (AUD and CAD) can't really get traction, especially CAD, which is flummoxing, as neither the commercials nor specs appear certain about what to do. The aussie is a little less confused, but not much. After hitting parity with USD, and with little surprise, it moved south. Currently, though, the specs look like they're gunning for the November highs. That said, it doesn't look the same for the USD vs. CAD. The third commodity currency, NZD, has behaved perfectly. When the commercials and specs where 180-degrees apart, price reversed and the move has been very clean so far.
The swissie had turned, with the commercials buying and specs selling, but the current charts show a shift in sentiment. The yen while not as pronounced, is in the same position. The pound is another story; the specs are selling and the commercials are buying. pretty clear, according to the charts
Gold and silver are trying to move higher, though, with silver, the specs and commercials are holding right now. The chart shows the specs buying gold last week and the commercials selling it, and I'm watching to see if the last highs will be broken. The double top (November's high and December's high--so far); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES came with bearish divergence; so, momentum is declining as price approaches these highs, telling us that specs are skittish.
That's it for now.
Stay warm, and trade to trade well,
Clay
Stock Calls Recap for 12/13/10
With each stock’s recap, we will include a (with market support) or (without market support) tag, designating whether the trade triggered with or without market directional support at the time. Anything in the first five minutes will be considered WITHOUT market support because market direction cannot be determined that early.
SNDK triggered long (without market support due to opening five minutes) and worked enough for an easy partial:
HANS triggered short (with market support) and worked enough for a partial:
In the Messenger, AMGN triggered long (without market support) and worked enough for a partial:
Rich's NFLX triggered short (with market support) and worked great all day:
His AAPL triggered short (with market support) and worked great:
His FFIV triggered short (with market support) and worked:
His CMG triggered short (without market support in this case, went a little early before the market rolled) and it worked great anyway:
His AIG triggered short (with market support) and worked:
AMZN triggered short (with market support) and worked great:
Add it up and you get six trades that triggered with market support, and all of them worked.