Since my last post ... not much has changed in the market. We closed at the same level on 5/22/2012, 5/24, 5/25, 5/30, 6/6 as today. We clearly are in a trading range, where the market can't seem to make up its' might as to which way it wants to go.
Price wise today at the very end we had a very strong up move implying higher prices were to come in the next few days, but I think volume (based on preliminary data) still is still showing that the big boys are not participating in this rally attempt. Certainly the spy, qqq and dj-30 had lower volume than yesterday, too early to see nasd, nyse and spx volume.
I took a very fast look at about 100 charts of companies that lead the market up from December through March and it was quite interesting … almost all of the ones that had an up day today did so on lower volume, and almost all of the stocks that had a down day were on greater volume … not what we want to see in a bullish trend.
I clearly see the market acting better over the last number of days as it seems to be stabilizing, but at this point … this seems more of a bounce to me than a rally. Now … it wouldn’t surprise me if we continue higher and get slightly over the 50 day moving average, but so far I’m not very convinced on this one from a longer term trend perspective. I just don’t have a lot of faith in a potential rally at this point.
With that said, I also don’t see any conviction to further downside either, although it would also not surprise me if we go down to test the low one more time and then rise up with more strength. In fact ... this is my preferred direction as I think this would result in a much stronger rally later this year.
In the last 15 days we have had 3 accumulation days and 2 distribution days, whereas in the last 20 days we had 3 accum days and 6 distribution days. So things seem to be getting less negative.
If I could manipulate the market (if only …), I would say the market is looking better day by day, but that it needs much more time (sideways movement) to heal if we are going to get a solid rally attempt and get people wanting to invest.
Yesterday was a big slap in the face to the bulls, but today was a strong recovery attempt … even though it could not get over the 20 day moving average (on the nasdaq) and only recovered roughly ½ of yesterday’s price decline. Even if volume on the NASD was higher (or roughly the same) than yesterday, that would mean that it took more volume to move the market ½ as much … hmmm … that tells me that the big boys are not buying ... but rather the opposite.
Clearly for now we are stuck in a trading range with a big battle occurring. Price wise it seems the bulls are winning, volume wise it seems the bears are winning. This tells me that that big boys are sitting this one out and that the small value investors are pushing this market up. This is not a recipe for a long term uptrend, but the landscape seems to be improving daily and therefore the outlook could change any day in either direction.
Stay safe and cautious for the time being.