Thursday, October 14, 2010

High Volume - Big Guys Reshufeling Positions???

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As I mentioned before the market opened, based on the Money Flow on the 15-min and 30-min charts we had negative trading today. Again, the same as I stated, since Money flow on the longer-time frame (on hourly charts stayed positive), the indexes recovered by the end of the session.

The strongest decline was noted today mostly in financial sectors (S&P 500 Financials, Nasdaq 100 Financials and Nasdaq 100 Banking).

We had yesterday very strong daily volume - some indexes beat their 2-3-4 month records on daily volume and that volume was during the price up-move (strong bullish volume activity). I've already mentioned that yesterday's volume could change supply/demand balance. However, today many indexes had even stronger volume and this volume was noted during the price decline (strong bearish volume activity). Such, daily volume on the S&P 500 Financial index was one of the highest daily volumes over past year. We already saw a reaction on that volume as a recovery by the end of the today's session. ETFs that track indexes continued to move higher even after the market closed - QQQQ (Nasdaq 100 tracking stock) has made about 1% up SPY and DIA (S&P 500 and DJI tracking stocks) have made about 0.2% up after the Bell. However, there is another interesting point. Trading volume on QQQQ during the first fifteen minutes after the Bell (in period from 16:00 until 16:15) was several times higher than the volume during any 15-minutes period during regular trading hours and this was Bullish volume surge.

Even if it could seems that market could to move higher tomorrow, I would not be very optimistic. Yes, maybe we may see positive opening, yet I would not bet after it. Taking into account indicators on the hourly chart I would expect to see indexes in the range between yesterday's high and today's low. Keep in mind that tomorrow is options expiration and it may put some additional volatility.

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