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.

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.

Nadamooch

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.

The trouncing lingers…

Bear's trouncing yesterday lingers...
Bear's trouncing yesterday lingers...

The market didn’t like Treas. Sec. Geithner’s stimulus plan.

Whether it was lack of details or a ‘sell the news’ scenario doesn’t matter.

The fact is Tuesday’s heavy selling from instituitions sticks out like a soar thumb on the market’s hand….

It’s still no time to buy. Until we break north of the 50-day moving average we’re calling the Sellers in control.