Friday, October 31, 2008

10.31.08 - Tale of Two Markets

While the S&P 500 is down some -1% early this morning, the Russell 2000 is up well over +1%. Looking at the positive tick and advance-decline line, it's clear so far in the a.m. that money is being put into the broader market at the expense of the large caps: a stealth rally, if you will.

So the million dollar question is, have the last two days represented consolidation for another immediate leg up, or a set up for an overbought cool off (note last night's high RSI comment)? At the moment, it looks like the former; but with this being the last day of the month, the weekend upon us and national elections next week, anything goes.

9:00AM PST: I have replaced my normal SPY posting with IWM today. Note the very strong performance in-line with cumulative tick. You wouldn't know this looking at the majors. Amazing. Intramarket spread/pair trade anyone?

9:25AM PST: SPY for comparison's sake. AD Line is flattening here - careful/ watch that trend line below.

10:20AM PST: Trendline held perfectly and tick remains very, very strong. Much more of a drop and longs will get stopped.

11:00AM PST: Further up moves from here in light of resistive volume spikes will be indicative of a short covering rally that may run into the close. We'll know in the next half hour or less. Big Ben is in play also.

11:20AM PST: And... no dice, at least not while Ben is talking/on-air. Hitting strong resistance at SPY $98. Can't assume it will hold with volume, tick and AD lines remaining strong. Bullish triangle? It's an area to watch -- we'll see.

11:55AM PST: Take a look at volume, lighter than yesterday. Best week since 1974? VIX down 10% to 56.8.

12:15PM PST: Looks like a sloppier close ahead than postulated. I'll be hedging into either further strength or on a confirmed break down.

12:40PM PST: Got those on right after my last post and I'm not unhappy about it even though VWAP held and now above R1 again. Enjoy your weekend/ Trick or Treating.

Never Investment Advice


Anonymous said...

Hello Jeff,,

Well here we are at the spy line ,,,,,,,again,, good luck..


Jeff Pietsch CFA, Esq said...

Thanks man.