Light Volume Equals A Boring Market…

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With only 132 million shares traded on the SPY, the market basically went nowhere.  Nothing has changed since the March low from 2009, as light volume still rules the market.  Ever since the cap was removed for the PPT, they have easily been able to keep the market flat to up on every light volume day the market has.  Of course the market has always been controlled to some degree, but when you now have an unlimited supply of free money, the control they have now is the highest it's ever been.

As much as I'd like to see a nice sell off, it's not coming until the big institutions decide to sell... it's really that simple.  The technicals didn't really change much today, as we are still over bought short term, but we can still go higher medium term.  However, I'm still looking for a small pull back later this week, but I'm not expecting too much.

Don't take this wrong, as I'm not bullish by any means... but I'm not bearish right now either.  The market is being propped up, and I'm not going to fight it... as I'll lose.  Here's an interesting video by my favorite president (I wish)...

For this week, it will be important for the master resistance at 112.00-112.50 to hold the bulls back.  If successful, then a pullback could start as early as Friday.  What I'm looking for, is for the adx line to bottom out, and start to re-cycle back up, with the negative di line leading the way.

Now if the 112.00-112.50 level fails to hold back the bulls, then we should see a move to 115.00 area for a double top next week.  I know that's not what you're looking to hear, but we are in a sideways market right now, that could break either way.  I'm going to remain neutral for now, and hope that 112.00-112.50 holds for the entire week.  I believe that if the level does indeed hold... for the entire week, then next week will be down.  Can the bears hold back bulls?  Only time will tell, as the market is just trying to put the bears to sleep right now.  Once they are all hibernating... the market will sell off.  Isn't that just the way it works?

Red

330 COMMENTS

  1. So true, so true. The only thing I can say is at least it was a down Monday. That means that at least the funds weren't buying. All indicators look toppy to me so maybe we'll get a sell off sooner. But again, that's probably just wishful thinking on my part.

    • I'm actually looking for an entry spot to short oil via the USO. It still could run a little more, as the dollar is currently falling back a little, and should continue until it finds support.

      As long as the dollar is pulling back, you don't want to short oil. Once the dollar finds it's support and gets ready to rally back up, then I'd feel safer shorting oil.

      I'd love to see the USO hit 40 right when the dollar finds it's support level. I think that will happen this week. I've had successfully trades every time I did one on the USO, and as long as I time my entry to correlate with the dollar, it should be another successful trade.

      Look at how many March calls there are at the 40 strike price vs. how many puts there are… huge difference. (http://bigcharts.marketwatch.com/quickchart/opt…) There is no way those market makers are going to pay out on those calls by expiration.

      I'll post the trade when I do it, but I'll be looking to buy the 40 put, and sell the 36 put (Vertical Put Spread) once the dollar bottoms, and looks like it's getting ready to rally again.

      The reason that I don't short oil now, is because it's tied to the dollar in some fashion. We need the dollar to rally, so oil will tank. Add to the fact that it's extremely over extended, and you should have a nice pull back on it.

    • Looks like there is still a little more upside left. I just wonder if they are going to pull back a little first or keep going higher?

      With good ol' Benny talking this Wednesday (I think it's Wednesday?), the market could pullback a little in anticipation of bad news, and they actually rally on the better then expected news from him. Hard too say at this point…

  2. USO Daily Chart
    http://www.flickr.com/photos/47091634@N04/43821

    interesting developments on the USO daily, now what is significant about the 2/5/2010 low is that it took out it's 12/11/2009 lows. We now have a lower high since the January highs didn't take out the Oct. 2009 highs and a lower low in place on the USO daily.

    the 40.43 level will be a brick wall

  3. From Carl just now:

    March S&P E-mini Futures: Today's day session range estimate is 1100-1112. The market will reach 1200 over the next three months.

    Note:
    1100-1116 yesterdays estimated range
    1100-1112 todays estimated range
    1102 right now

      • Good Morning, Gcocks

        I can see buying TNA should it rise to $44.23 (primary pivot) and sell it if it falls below that.

        After all these up days on TNA, it's easy to imagine a down opening as a turn of some kind.

          • Jumping into TZA at this point is really hard to do, so yeah maybe an over-reaction play on TNA.

            It's $1.40 under it's primary pivot. This is the territory I swore off of, falling knife and all that.

            All the pivots are compressed today because yesterdays range was so small, but TNA is $0.50 below S2. Yuck.

  4. Carl at days end:

    Estimated /ES range: 1100-1112 (12 point range)
    Actual /ES range: 1090.25-1112.75 (22.5 point range)

    Missed the low of the day and the range by nearly 10 points

    Carl's trading:
    Bought /ES at 1003.50, sold at 1096.75 (-6.75)
    Bought /ES 1t 1095, sold at 1095 (+0)

    Grade D

    Note: News came out and messed up everything, but it's all part of trading so Carl gets dinged.

  5. TZA improved on bad consumer confidence numbers and closed up 3.3% today.

    We are in a New Moon Trade (favors TZA).
    [ After six days, this trade is DOWN 7.5% ]

    Volume today for TZA was the highest of the last 7 days.

    $RVX (VIX for $RUT) closed 6.5% higher.

    TZA was up today after being down nine days in a row.

    Ultimate Oscillator jumped from 21 to 30 on the rise in TZA off the bottom.

    Bollinger Bands for $RVX (VIX for $RUT): the lower BB was touched last Friday, but did not touch yesterday, and bounced away today, seemingly indicating that $RVX will be rising (good for TZA).

    Bollinger Bands for $RUT: the upper band rose, moving farther away from $RUT which fell away sharply, indicating that TNA will continue to fall (good for TZA).

    Overall, it looks like TZA will rise again tomorrow.

      • How do you read this?

        I don't normally watch this. I pulled it up (your link didn't work, but I looked at $RUT:$RVX), and decided I didn't know what it meant.

        Dreadwin!! Where are you?

      • http://www.americanbulls.com has an interesting view of TZA:

        The last three candlesticks formed a Bullish Morning Star Pattern . This is a bullish reversal pattern that marks a potential change in trend. Though it is highly reliable confirmation is still recommended.

        It then goes on to describe in detail how to confirm the trend change (to buying TZA) based on what happens tomorrow.

        • Watch for bounces on the 50 day MA and 20 day MA on $RUT. Assume that the 50 day MA will play support for the first bounce. Buy TNA for a scalp at the bounce point. Should be good for an easy 3% day trade in TNA.

        • One more thing. The 50 day MA for $RUT will be very close to but not identical to IWM's, and the market pays more attention to IWM than /TF. Use IWM as the indicator to time a bounce in TNA.

      • From that chart, last week friday had a pretty good (but not ideal) entry point for TZA.

        Keep in mind that the January 24th-25th (or so) $RUT buy signal has not been invalidated … yet. We need to see $RUT:$RVX close outside the upper bb, then close inside the upper bb the next day for a new signal.

    • $RUT could also consolidate sideways to work off the overbought condition and play out some kind of crazy triangle or flat. I'm not expecting big price movements in $RUT for the next few days, but the market can always make me look dumb 🙂

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