I hope everyone has a nice holiday season. I'd hate to see it get ruined by a bunch of slick NYC operators, so take extra care in trading...
Thursday and Friday we had EXTREME volume in SPX and Nasdaq respectively. While the SPX is weak and these indices are out of synch... making the highs in different time frames. The volume came in different as well... SPX had it's big day on Thursday, while Nasdaq had the big day Friday.
Quietly this week, the SOX index emerged to a new 2009 high on strong volume in conjunction with a new Nasdaq high on Wednesday of this week.
SPX on the other hand, had it's big volume in the banking sector... and while volume was ballistic in the $BKX, we failed to break the recent low on blowout volume by 8 cts. Now it still only closed less than a point off that low, so the jury is out. If you are a bear, you can hang your hat there, I guess.
Now looking at this DAILY volume, I think you can see the divergence. We had the price without the volume at the high, and the volume without the price on Friday on Nasdaq. If you look at the hourly, you can see a bullish close on Friday. Now the best T.A. signals are generated in the longest timeframes, at least that has been my experience. While the daily signal is negative, do not overlook what we see here on the hourly and weekly....
Weekly, Higher High and Higher Volume on Nasdaq...
The SOX Index is often one of the last elements to rally in completing a top in the market. It is having a run here... 2009 High, 2009 closing high on volume this week. There are plenty of positive reasons to buy a market making weekly highs on volume, and a sector that is making highs on volume... especially in a low volume week like the one ahead, we may see some follow through and enthusiasm from the participants and the believers.
Along with the Semiconductors we will usually see the MOST Speculative issues run up. Typically stocks that had a run during the year, but that are resurrected for this holiday trade. So watch for it. I think what you are seeing are operators culling their portfolios, taking tax losses etc. In any case the name of the game for Santa Claus rallies is DISTRIBUTION...
Here's the SOX chart, It sure looks good.
Now there are some super trading opportunities for those nimble enough to work in low volume fast markets, just don't get caught in some of this distribution, because we usually see some real garbage marked up, then dumped.
Have a GREAT Holiday !!
