High-Vol Clash

Accumulation for the Dow and S&P was offset with Distribution on the Nasdaq.

We’re giving the Bear the edge for the day. Leadership of key price lows on the major indexes very often comes from the tech names found in the Nasdaq.

We’ll stick to our Seller’s Edge bias unless we get further confirmation of institutional grade buyers taking bets on the long side.

We The Living

A bounce off lows that doesn’t match the volume of recent carnage is highly suspect.

Measuring the volume behind moves is at the core of our strategy. Volume patterns often lead the price action. It tells us where institutions are placing their bets. It’s nothing we want to be on the opposite side of.

The market’s pounding last week produced two Distribution Days, where volume was greater than day before as prices declined on the major indexes.

We’ll want to see some Accumulation, where higher volume accompanies up days, before altering our current Seller’s Bias.

This will be an interesting week as we continue to watch for signs of how well U.S. equities handle Europe’s ongoing financial crisis.

Bear Shows Claws

Distribution, that’s institutional grade selling evident by a down day on the indexes with higher volume than the previous day, closed out a session marked by a key Fed announcement.

It would appear the markets don’t like the Fed’s new plan of lowering rates on long-term bonds while keeping shorter term rates the same.

But it should be noted that true direction from Fed announcements shouldn’t be discerned until the following day.

We take today’s heavy selling as a negative, yet won’t consider altering our bias until we get further confirmation that institutions may be preparing for lower prices.

The 50

Price action appeared tired Tuesday. Our bias remains at Buyer’s Caution as modest declines on light volume do little to excite.

We expect to see some pullback with the 50-day moving averages serving as resistance for most of the major indexes.

We’ll continue to be bullish as long as sell volume remains light and leadership from top names such as Apple Inc. (APPL) hit new highs.

Dark Backdrop

It’s just like the market to put in a rally as headlines remain grim.

Institutions have been accumulating shares over the last couple weeks.

We’re seeing leaders emerge from our pool of top growth stocks.

Key sectors of Semiconductors ($SOX) and Retail ($RLX) are pushing north of key moving averages.

And while today’s price action wasn’t a rally, the fact that it’s held ground against all the negative news speaks well for the bull.

We’re bulls with a Buyer’s Caution Bias. We’ll be bulls until we see institutions start to dump shares en mass.

Lift Off

Yesterday’s rally extended on heavier volume today.

Discerning real, committed buying from short covering is now key to our analysis.

We expect to see a fair amount of short covering as the major indexes come off their recent lows.

We’re encouraged to see early leadership from Semiconductors ($SOX), a traditional bellwether.

As soon as we have quality Growth Stocks breaking out we’ll let you know.

Eeekin’ It Out

Feels like a short squeeze coming.

Whenever news it at its worst, and the market no longer sells, there’s good reason to think the next move will be a rally.

Moves off lows can be sharp as short sellers often buy in a hurry to cover themselves.

Tuesday’s strength from Semiconductors ($SOX) and Transportation ($TRAN) are strong votes for an upwards push.

But in this environment, any news of default could easily panic the system.

Surprise, Bitch!

We almost always consider late-day volume smarter money than what usually drives the morning action.

Monday’s strong close threatens to reverse the Bear’s downward efforts. These counter rallies can be sharp.

It’s not uncommon for the markets to turn just when things appear to be at their worst, which recent fears over Greece’s looming default might suggest.

Stay tuned.

Spanking Good

The Bears delivered Friday with a fresh round of heavy selling, sending shares down into the weekend as the world awaits resolution with the Greek debt crisis.

Another round of Distribution marks the charts. For the unfamiliar, that’s volume greater than the previous day in conjunction with a down day for the major indexes.

Key sectors of Retail ($RLX), Semiconductors ($SOX) and Financials (XLF) threaten to drag everything lower.

More research to come this weekend.


Guy I knew a ways back in my Chicago days always used to say “nadamooch” when asked what was up.

Most of Thursday’s action was just that, pretty sleepy.

But clear distribution for the Nasdaq could be a precursor for further downside. Though nothing to get us to change our bias just yet.

A modest rally in the Retail sector ($RLX +2.63%) gives the Bull some more fuel.

The Heavies

We had another day of Distribution on the major indexes to kick off a holiday shortened week.

Continued institutional-grade selling has us cautious.

We might expect to see another round of lows in the coming sessions. Such an event could just as easily trigger a capitulation followed up by bottom buyers. In other words, look out for increased volatility, buckle up.

Lack of high-quality growth stocks setting up for new highs prevents us from entering the market.¬†As for shorts, perhaps we’ll see some entries worth noting this week.